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THE 


Distribution  of  Wealth; 

OR,  THE 

ECONOMIC   LAWS   BY  WHICH   WAGES  AND 
PROFITS  ARE   DETERMINED. 


THE  LIMITATIONS   ON  WEALTH,  THE  CORRELATION  OF 

WEALTH  AND   POVERTY— INTEREST— TAXATION 

—  MONOPOLIES  — PROTECTION    AND 

FREE  TRADE. 


BY 

RUFUS    COPE. 

'I 


'  OP  THB*^ 

trSIVBRSITT] 


PHILADELPHIA: 

J.  B.  LIPPmCOTT   COMPANY. 
1890. 


4 


Copyright,  1890,  by  Rdfus  Cope. 


CONTENTS. 


CHAPTER    I. 

PAGE 

Introduction 6 

CHAPTER    II. 

Changed  Conditions — Dependence  of  Labor  on  Capital — Increased 
Power  of  Accumulated  Wealth 25 

CHAPTER    III. 

Statistics  of  Production  and  Distribution,  showing  the  Amount  of 
Total  Product  and  the  Manner  in  which  it  is  divided — Wages — 
Profits — Aggregation  of  Wealth — Statistics  of  Money 36 

CHAPTER    IV. 

Limitations  on  Wealth — The  Correlation  of  Wealth  and  Poverty  .    .   .    113 

CHAPTER    V. 

Savings,  represented  by  Durable  Property — Nature,  Effect,  and 
Limit  of 143 

CHAPTER    VL 

Interest  on  Credits — Equity  and  Policy  of — Effect  of,  on  the  Aggrega- 
tion of  Wealth 168 

CHAPTER   VIL 

Taxation,  Direct  and  Indirect — Duties  on  Imports — Income  Tax — Tax 
on  Credits — Amount  of,  not  of  Principal  Importance — Burden  of,  de- 
pends on  how  laid  and  how  expended — Effect  of,  on  Distribution 
of  Wealth 192 

CHAPTER    VIIL 

International  Trade — Protection — The  Extent  to  which  International 
Exchange  of  Products  is  Profitable  to  the  People — Doctrine  of  Free 
Trade — Protection — Principle  involved  in — Historical  Review  of — 
Bessemer  Steel — A  Tariff  Commission — Foreign  Immigration    .   .    .    225 

3 


4  CONTENTS. 

CHAPTER    IX. 

PAGE 

Monopolies,  Natural  and  Artificial — State  Control  of — Trusts 274 

CHAPTER    X. 

L^What  makes  tlie  Rate  of  Wages — Comments  on  Various  Theories  con- 
cerning  293 

CHAPTER    XI. 

Limitations  on  Profits — Remedies  for  Low  Wages— What  makes  the 
Rate  of  Wages — Regulation  by  Statute — Restrictions  on  Monopolies 
— A  Low  Rate  of  Interest — Limitations  on  the  Ownership  of  Land  .    310 

CHAPTER    XIL 

Education  of  the  People,  Secular  and  Religious 342 


/ 


^^  OF  THb'^C^ 

'tnnVEESITTl 

THE 

DISTRIBUTION  OF  WEALTH; 

OR,    THE 

ECONOMIC  LAWS  BY  WHICH  WAGES  AND  PROFITS 
ARE   DETERMINED. 


CHAPTEE    I. 

INTRODUCTION. 


The  first  extended  and  systematic  treatise  on  the  subject  of 
political  economy  was  Adam  Smith's  "  Wealth  of  Nations,"  pub- 
lished in  1776.  Smith  was  followed,  in  1803-17,  by  Malthus  and 
Eicardo.  These  writers  gave  form  and  direction  to  the  current 
of  thought  on  political  science,  and  what  are  now  known  as  the 
orthodox  views  of  political  economy  may  be  found  definitely 
formulated  in  their  writings.  Their  opinions,  with  little  sub- 
stantial modification,  still  hold  sway,  and  continue  to  shape  the 
views  of  modern  authors. 

Smith  holds  his  position  of  authority  by  virtue  of  an  ability 
which  is  unquestioned,  a  style  that  is  forcible  and  clear,  and 
the  general  soundness  of  his  theories,  to  which  he  always  ap- 
plies the  test  of  practical  illustration. 

Political  science  remained  for  many  years  in  a  stationary 
condition,  and  naturally  fell  into  the  custody  of  the  college 
professor,  who,  for  the  most  part,  occupied  himself  with  the 
task  of  interpreting  what  had  already  been  written,  rather 
than  with  new  and  original  investigations.  It  appears  to 
have  been  generally  regarded  as  a  completed  science;  and, 
as  a  consequence,  the  discussion  of  the  subject  more  fre- 
quently degenerated  into  an  inquiry  into  the  exact  limits  of  the 

6 


6  THE  DISTRIBUTION  OF  WEALTH. 

old  doctrines,  and  the  most  appropriate  formulas  for  their  ex- 
pression. It  had  reached  that  stage  in  the  history  of  a  science 
where  terminology  begins  to  overshadow  substance,  and  hyper- 
criticism  busies  itself  more  about  modes  of  expression  than  the 
thought  expressed.  The  schoolman  has  a  penchant  for  defini- 
tion. One  of  his  leading  aims  appears  to  be  to  crowd  subjects 
into  formal  definitions  that  exactly  fit,  touching  at  all  points,  and 
slack  at  none.  It  has  in  this  manner  come  about  that  there  are 
a  host  of  writers  who  assume  to  be  scientific  and  thorough,  who 
are  merely  literary  valet  de  chambres,  supervising  the  verbal 
wardrobe  of  other  men's  ideas, — a  service  necessary,  perhaps,  to 
be  attended  to ;  but  it  should  not  be  forgotten  that  strained  at- 
tempts at  extreme  accuracy  of  expression  do  not  contribute  to 
perspicuity.  A  writer  who  tasks  himself  with  the  work  of 
giving  expression  to  the  doctrines  of  a  complex  science,  in  terms 
of  such  absolute  exactness  and  completeness  as  to  forestall 
quibblers  who  detach  words  from  their  context,  gains  nothing 
in  clearness. 

Writers  on  political  economy  are  prone  to  attempt  to  sub- 
ject the  science  to  the  limitations  of  scholastic  formulas, 
wrought  out  by  processes  of  abstract  reasoning  in  which 
economic  forces  are  regarded  as  accurately  ascertained  invari- 
able qualities,  or  quantities,  whose  variations  may  be  definitely 
measured ;  but  political  science  cannot  be  reduced  to  a  code  of 
abstract  formulas ;  nor  will  it  always  yield  to  the  precision  of 
mathematic  forms  of  statement.  It  deals  with  a  multitude  of 
facts,  and  numerous  and  conflicting  forces  of  varying  intensity  j 
and  attempts  at  absolute  precision  of  statement  within  the 
compass  of  a  sentence  or  a  paragraph  lead  either  to  clumsy 
obscurity,  or  to  the  omission  of  troublesome  qualifications  which 
may  not  be  packed  within  the  limits  of  a  symmetrical  formula. 

It  is  as  impracticable  to  declare,  in  precise  terms,  the  laws  of 
trade,  or  of  the  tenure  of  property,  or  to  define  methods  of  taxa- 
tion adapted  to  all  ages  and  conditions  of  social  progress,  as  it  is 
to  make  one  adjustment  of  the  sails  of  a  ship  answer  for  a  voy- 
age across  the  sea.  There  are  principles  that  inhere  in  the  na- 
ture of  things  which  must  ever  remain  the  same ;  but  doctrines 
which  deal  not  with  fixed  conditions  alone,  but  with  all  the 
changing  phases  of  a  growing  civilization,  must  be  shaped  and 


THE  DISTRIBUTION  OF  WEALTH.  7 

fitted  to  new  conditions  as  they  arise.  Political  economy  is  not 
a  stationary  science ;  it  was  not  embalmed  in  the  writings  of 
Eicardo,  Malthus,  and  Smith.  What  is  once  true  is  always 
true ;  but  that  which  is  true  of  one  condition  of  men,  or  of  the 
relations  of  the  people  of  one  age,  may  be  far  from  true  of  those 
of  another. 

Many  publications  upon  the  subject  of  political  economy  are 
freighted  with  the  anaemic  thought,  whose  vitality  has  been  de- 
stroyed by  the  malaria  of  a  stagnant  science;  and  the  most 
sickly  localities  are  often  to  be  found  in  the  vicinity  of  ancient 
institutions  of  learning. 

When  the  Talmud  was  produced,  religious  literature  and  re- 
ligious science  among  the  Jews  had  reached  what  political 
economists  term  the  stationary  state,  and  we  have,  therefore,  in 
this  remarkable  religious  miscellany,  an  illustration  of  a  religion 
gone  to  seed, — that  phase  of  development  in  which  normal 
thought  is  superseded  by  idle  speculation  and  quaint  conceits 
arrayed  in  the  garb  of  consequential  pretence. 

One  of  the  curious  whims  that  exhibits  itself  in  that  remark- 
able body  of  writings  is  the  subjection  of  thought  to  the  notion 
of  numerical  relation.  In  consequence,  there  is  the  book  of 
Ones,  the  book  of  Twos,  the  book  of  Threes,  and  so  on  through 
a  long  series.  When  we  read  in  the  book  of  Ones  that  "  The 
former  Chasidim  used  to  sit  still  one  hour,  then  pray  for  one 
hour,  then  sit  for  another  hour ;"  and  that  "  Eabbi  Chanina  could 
put  on  and  off  his  shoes  while  standing  on  one  leg  only,  though 
he  was  eighty  years  of  age ;"  or  in  the  book  of  Sevens  that  "  a  dog 
in  a  strange  place  does  not  bark  for  seven  years ;"  or  in  the  book 
of  Tens  that  "Moses,  being  ten  ells  high,  seized  an  axe  ten  ells 
long,  and,  springing  up  ten  ells,  struck  Og  on  the  ankle  and  killed 
him ;"  we  cannot  avoid  the  thought,  that  possibly  ideas  came  to 
be  fashioned  with  a  purpose  of  avoiding  discords  in  this  arti- 
ficial system  of  numerical  harmonies,  to  which,  doubtless,  both 
tradition  and  logic  were  often  compelled  to  yield  precedence. 

Political  economy  has  sometimes  exhibited  symptoms  of  the 
Talmudic  tendency.  At  the  risk  of  intruding  upon  what  may 
have  been  intended  as  only  a  tete-d-tete  between  two  collegiates 
in  their  chosen  dialect,  I  quote  from  a  recent  number  of  the 
Journal  of  Economics  the  following : 


8  THE  DISTRIBUTION   OF  WEALTH. 

"  The  first  of  these  (two  points)  is  the  form  of  the  curve  of 
the  price  of  wheat,  which  Jevons  regards  as  asjmptotal,  and  Mr. 
Wickstead  as  cutting  both  axes.  Mr.  Wickstead  proposes  to 
limit  his  curve  to  the  prices  of  wheat  considered  as  used  for 
human  food  only.  This  limitation  does  not  radically  alter  the 
problem,  as  the  alternative  uses  at  lower  values  only  delay  the 
approach  of  the  curve  to  the  axis,  and  do  not  prevent  it  reach- 
ing zero,  if  Mr.  Wickstead's  views  are  correct." 

"  There  are  other  uncertainties  in  the  data.  Is  the  excessive 
supply  supposed  to  be  caused  by  an  accidental  large  yield  or 
acreage,  or  by  the  discovery  of  a  new  more  prolific  variety? 
Differences  of  this  kind  in  the  data  would  modify  the  form  of 
the  curve,  but  would  not  affect  the  main  question,  whether  or 
not  it  is  asymptotal. 

Here  are  two  astute  professors  of  science,  or  else  young  men 
who  have  not  yet  been  long  enough  out  to  have  wasted  their 
college-born  enthusiasm  for  asymptotes  along  the  jolting  high- 
way of  practical  affairs,  who,  having  observed  a  certain  analogy 
between  the  relation  of  a  curved  line  representing  the  varying 
price  of  wheat  and  a  line  representing  the  product,  and  the 
definite  mathematical  relation  of  the  asymptote  to  its  axis, — an 
analogy  whicb,  if  simple  and  easily  comprehended,  might  serve 
the  purpose  of  illustration, — imagine  themselves  to  be  discussing 
a  great  principle,  possessing  all  the  necessary  qualifications  of 
recondite  novelty  to  render  it  worthy  the  title  of  a  "  doctrine" 
of  political  science. 

The  science  of  political  economy  has  become  prolific  of  learn- 
ing of  this  character. 

Asymptotes  are  the  dumb-bells  and  Indian  clubs  of  science, 
and  should  constitute  a  part  of  the  furniture  of  every  well- 
equipped  intellectual  gymnasium.  But,  very  naturally  perhaps, 
many  of  our  worthy  professors,  when  they  go  abroad  as  archi- 
tects of  political  science,  insist  on  employing  the  implements 
with  which  they  have  become  most  familiar,  rather  than  the 
common,  though  more  efiicient,  tools  of  the  practical  artisan. 
The  consequence  is,  that  the  noise  they  make  is  sometimes  alto- 
gether out  of  proportion  to  the  number  of  nails  they  drive. 
That  which  most  attracts  the  listening  crowd,  in  the  field  of 
constructive  science,  is  not  always   the  sound  of  effective  in- 


THE  DISTRIBUTION  OF  WEALTH.  9 

dustry,  but  often  only  the  resounding  din  of  asyraptotalism ;  it 
is  the  professor  abroad  with  his  dumb-bells — driving  tacks. 

Science  is  simply  the  ascertained  interpretation  of  facts. 
That  interpretation  may  or  may  not  be  reduced  to  the  form  of 
an  abstract  generalization.  But  when  it  is  so  expressed,  every 
fact  must  have  a  place  in  the  theory ;  since  a  theory  which  runs 
counter  to  any  fact,  however  plausible  or  recondite  may  seem 
the  formula  in  which  it  is  clothed,  must  be  unsound. 

Witbin  the  present  century  new  economic  forces  have  come 
into  play,  and  old  tendencies  have  gathered  increased  power. 
There  are  conditions  which  were  useful  in  an  earlier  stage  of 
social  development  that  have  performed  their  service  and  ex- 
hausted their  utility,  and  now  remain  only  as  burdens  which 
society  has  not  yet  been  able  to  c'ast  off.  There  are  forces  which 
are  essential  to  the  growth  of  society  that  need  to  be  harnessed 
with  judicious  restraints.  Forms  of  government,  methods  of 
administration  of  the  highest  utility  in  one  age,  may  become  an 
insufferable  evil  in  the  next.  Eules  of  political  economy  fitted 
to  one  condition  of  society,  adapted  to  one  day  and  age,  may  be 
wholly  unsuited  to  other  times  and  conditions. 

Within  the  limits  of  the  present  century  the  producing  power 
of  the  people,  in  every  department  of  industry,  has  been  greatly 
multiplied  by  new  discoveries  and  inventions.  According  to 
Edward  Atkinson,  "  the  labor  of  one  man,  aided  by  improved 
machinery,  will,  in  one  year,  produce  five  thousand  six  hundred 
and  twenty-five  bushels  of  wheat  (in  Dakota  ?)  ;  the  moving  of 
four  thousand  five  hundred  bushels  of  wheat  seventeen  hundred 
miles  represents  the  labor  of  one  and  a  half  men  for  one  year ; 
the  labor  required  for  making  this  wheat  into  flour,  and  making 
barrels  for  the  same,  from  the  log,  is  equivalent  to  the  labor  of 
one  man  for  one  year ;  add  to  this  the  labor  of  one  man  for  six 
months  for  repairs  of  machinery,  and  one  thousand  barrels  of 
flour  delivered  in  New  York  represent  only  the  direct  labor  of 
four  men  for  one  year ;  the  conversion  of  one  thousand  barrels 
of  flour  into  bread  and  its  sale  represent  the  work  of  only  three 
persons  working  one  year.  Thus  seven  men  serve  bread  to  one 
thousand  persons.  One  man  in  a  cotton-mill  spins  and  weaves 
cotton  cloth  for  two  hundred  and  fifty  persons ;  one  in  a  woollen- 
mill,  cloth  for  three  hundred  persons ;  one  in  a  coal-mine,  iron- 


10  THE  DISTRIBUTION  OF   WEALTH. 

mine,  or  iron-furnace  serves  two  hundred  pounds  of  iron  each 
to  five  hundred  persons ;  one  in  a  men's  boot  and  shoe  factory 
makes  two  pairs  a  year  of  boots  and  shoes  for  eight  hundred 
persons ;  one  in  a  women's  boot  and  shoe  factory  makes  three 
pairs  a  year  for  one  thousand  persons ;  one  in  a  shirt  factory 
sews  two  thousand  four  hundred  excellent  shirts,  or  more  of 
lower  quality,  or  four  a  year  for  six  hundred  to  eight  hundred 
persons."  * 

In  the  manufacture  of  agricultural  implements  one  man  does 
the  work  of  two  men  twenty-five  years  ago.  In  the  principal 
labor  involved  in  the  manufacture  of  small-arms  one  man  now 
does  what  it  required  forty-five  to  fifty  to  do  by  hand.  In  the 
manufacture  of  women's  boots  and  shoes  one  person  does  the 
work  which  it  would  take  five  to  do  by  hand.  In  other  depart- 
ments of  the  same  industry  one  person  has  taken  the  place  of 
two.  "With  Goodyear's  sewing-machine  for  turned  shoes  one 
man  does  the  work  of  eight.  In  nailing  on  heels  one  man  does 
the  work  of  five ;  in  sand-papering  the  bottoms  one  man  does 
the  work  of  four. 

In  the  construction  of  carriages  one  man  has  taken  the  place 
of  three.  In  1879  a  large  broom-manufacturing  concern  with 
seventeen  skilled  men  manufactured  five  hundred  dozen  brooms 
per  week.  In  1885,  with  but  nine  men  and  improved  machinery, 
the  same  firm  turned  out  twelve  hundred  dozen  brooms  per  week. 

In  the  manufacture  of  carpet  one  man  now  does  the  work 
which  it  Required  from  ten  to  twenty  persons  to  do  in  1860. 

In  the  manufacture  of  hats  of  a  medium  grade  one  man  does 
the  work  of  three.  A  hand-loom  weaver  used  to  weave  from 
sixty  to  eighty  picks  per  minute  in  weaving  a  cloth  of  good 
quality  with  twenty  threads  of  twist  to  each  one-quarter  square 
inch.  A  power-loom  now  weaves  one  hundred  and  eighty  picks 
per  minute  of  the  same  kind  of  cloth,  and  one  weaver  minds  all 
the  way  from  two  to  ten  looms,  according  to  the  grade  of  the 
goods. 

In  the  manufacture  of  flour  one  man  has  taken  the  place  of 
four ;  and  in  the  manufacture  of  furniture,  of  two  or  three  work- 
men formerly  required  to  do  the  same  work. 

*  Atkinson  on  Distribution  of  Products. 


THE  DISTRIBUTION  OF  WEALTH.  11 

In  nearly  all  departments  of  industry,  by  means  of  machinery 
and  combination  under  the  direction  and  control  of  capital,  the 
power  of  labor  has  been  wonderfully  augmented.  Naturally, 
we  would  expect  a  corresponding  growth  of  general  prosperity 
and  of  individual  wealth.  And  of  wealth  there  is  indeed  an 
abundance.  But  the  conditions  which  have  made  rapid  accu- 
mulations of  wealth  practicable  are  unfavorable  to  its  equitable 
distribution.  The  accumulated  product  of  the  industry  and 
skill  of  the  people  of  a  nation  is  owned  and  controlled  by  a 
comparatively  small  number  of  persons,  many  of  whom  have 
made  to  society  no  adequate  return  for  the  possessions  which 
they  have  acquired,  but  which  they  did  not  create.  The  laws 
of  inheritance,  of  finance,  the  laws  of  trade  and  of  land  tenure 
are  such  as  to  lead  to  the  grossest  inequalities  of  property  and 
of  opportunity  for  its  acquisition ;  and,  although  there  has  been 
the  most  wonderful  development  of  the  power  of  labor  to  pro- 
duce, there  has  been  no  corresponding  increase  in  the  wealth  of 
the  great  majority  of  the  people.  The  extremes  of  poverty  and 
of  affluence  have  grown  wider  and  wider  apart,  and  suffering  and 
want  have  become  more  common.  Each  individual  has  become 
less  and  less  an  independent  producer.  All  have  become  in- 
volved in  a  tangled  net-work  of  commercial  and  financial  forces, 
and,  as  they  move  on  together  in  the  hurrying,  jostling  crowd, 
some  are  pushed  forward,  some  are  thrust  aside,  and  many  are 
trampled  under  foot. 

Mr.  Henry  George,  in  "  Protection  or  Free  Trade,"  says,  "  Five 
centuries  ago  the  wealth-producing  power  of  England,  man  for 
man,  was  small  indeed  compared  with  what  it  is  now.  Not  merely 
were  all  the  great  inventions  and  discoveries,  which,  since  the 
introduction  of  steam,  have  revolutionized  mechanical  industry, 
then  undreamed  of,  but  even  agriculture  was  far  ruder  and  less 
productive.  Artificial  grasses  had  not  been  discovered.  The 
potato,  the  turnip,  the  carrot,  the  beet,  and  many  other  plants 
and  vegetables  which  the  farmer  now  finds  most  prolific,  had  not 
been  introduced.  The  advantages  which  ensue  from  rotation 
of  crops  were  unknown.  Agricultural  implements  consisted  of 
the  spade,  the  sickle,  the  flail,  the  rude  plough,  and  the  harrow. 
Cattle  had  not  been  bred  to  more  than  half  the  size  they  aver- 
age now,  and  sheep  did  not  yield  half  the  fleece.    Eoads,  whore 


12  THE  DISTEIBUTIOJT   OF  WEALTH. 

there  were  roads,  were  extremely  bad;  wheel  vehicles  were 
scarce  and  rude ;  and  places  a  hundred  miles  from  each  other 
were,  in  difficulties  of  transportation,  practically  as  far  apart  as 
London  and  Hong-Kong,  San  Francisco  and  New  York  are  now. 
Yet  patient  students  of  those  times,  such  men  as  Professor 
Thorold  Eogers,  who  has  devoted  himself  to  the  history  of 
prices,  and  has  deciphered  the  records  of  colleges,  of  manors, 
and  public  offices,  tell  us  that  the  condition  of  the  English 
laborer  was  not  only  relatively  but  absolutely  better  in  those 
rude  times  than  it  is  in  England  to-day,  after  five  centuries  of 
advance  in  the  productive  arts.  They  tell  us  that  the  working- 
man  did  not  work  so  hard  as  he  does  now,  and  lived  better; 
that  he  was  exempt  from  the  harassing  dread  of  being  forced 
by  loss  of  employment  to  want  and  beggary,  or  of  leaving 
a  family  that  must  apply  to  charity  to  avoid  starvation. 
Pauperism,  as  it  prevails  in  rich  England  of  the  nineteenth 
century,  was,  in  the  far  poorer  England  of  the  fourteenth  cen- 
tury, absolutely  unknown.  Medicine  was  empirical  and  super- 
stitious. Sanitary  regulations  and  precautions  were  all  but  un- 
known. There  was  frequently  plague  and  occasionally  famine ; 
for  owing  to  the  difficulties  of  transportation,  the  scarcity  of 
one  district  could  not  be  relieved  by  the  plenty  of  another.  But 
men  did  not — as  they  do  now — starve  in  the  midst  of  abundance ; 
and,  what  Is  perhaps  the  most  significant  of  all,  women  and 
children  were  not  worked  as  they  are  to-day ;  but  the  eight- 
hour  system,  which  even  the  working-classes  of  the  United 
States,  with  all  the  profusion  of  labor-saving  machinery  and 
appliances,  have  not  yet  attained,  was  then  the  common  system." 

John  Stuart  Mill,  in  his  work  on  political  economy,  says, 
"Hitherto  it  is  questionable  if  all  mechanical  inventions  yet 
made  have  lightened  the  day's  burden  of  any  human  being. 
They  have  enabled  a  greater  population  to  live  the  same  life  of 
drudgery  and  imprisonment,  and  an  increased  number  of  manu- 
facturers and  others  to  make  fortunes.  They  have  increased  the 
comforts  of  the  middle  classes  ;  but  they  have  not  yet  begun  to 
effect  those  great  changes  in  human  destiny  which  it  is  in  their 
nature  and  their  futurity  to  accomplish." 

Professor  Thorold  Eogers,  in  his  "  Six  Centuries  of  Work  and 
Wages,"  speaking  of  the  thirteenth  and  fourteenth  centuries  in 


THE   DISTRIBUTION   OF   WEALTH.  13 

England,  says,  "  All  the  necessaries  of  life,  in  ordinary  years, 
were  abundant  and  cheap ;  and  even  in  dearer  years  the  margin 
of  wages  or  profits  over  the  bare  wants  of  life  was  consider- 
able enough  to  fill  up  the  void.  Meat  was  plentiful,  poultry 
everywhere,  eggs  cheapest  of  all.  The  poorest  and  meanest 
man  had  no  absolute  and  insurmountable  impediment  put  upon 
his  career  if  he  would  seize  his  opportunity  and  make  use  of 
it.  .  .  . 

"  I  am  well  aware  that  such  medical  skill  is  now  at  the  ser- 
vice of  the  poor  as  princes  and  prelates  desired,  but  were  en- 
tirely without,  in  the  Middle  Ages.  ...  I  know  that  four  grains 
of  wheat  and  barley  or  any  other  grain  are  produced  by  modern 
tillage,  where  one  was  with  difficulty  raised  before ;  that  the  ox 
has  been  selected  and  bred  and  fed  from  four  hundred  pounds  or 
less  to  twelve  hundred  or  more ;  that  sheep  which  once  yielded 
a  pound  of  wool  precariously,  now  produce  from  seven  to  nine 
pounds ;  that  the  powerful  cart-horse  has  taken  the  place  of  the 
wretched  and  stunted  pony  of  the  old  English  breed,  and  that 
other  animals  which  are  destined  for  the  service  of  man  have 
been  selected  till  there  seems  nothing  to  desire  in  their  shape, 
size,  or  utility.  I  see,  in  all  directions,  that  human  toil  has  been 
supplemented  and  sometimes  superseded  by  mechanical  agencies 
which  genius  has  invented  and  patience  has  elaborated.  .  .  . 
But  I  am  convinced  that  modern  civilization  will  be  judged, 
not  by  what  it  has  done,  but  by  what  it  has  left  undone ;  not  by 
what  it  has  remedied,  but  by  what  it  has  failed  to  heal,  or  at 
least  to  have  relieved ;  not  by  its  successes,  but  by  its  short- 
comings. It  may  be  that  the  progress  of  some  has  been  more 
than  counterbalanced  by  the  distress  and  sorrows  of  many ;  that 
the  opulence  and  strength  of  modern  times  mock  the  poverty 
and  misery  which  are  bound  up  with  and  surround  them ;  and 
that  there  is  an  uneasy  and  increasing  consciousness  that  the 
other  side  hates  and  threatens. 

"  It  may  be  well  the  case,  and  there  is  every  reason  to  fear  it 
is  the  case,  that  there  is  collected  a  population  in  our  great 
towns  which  equals  in  amount  the  whole  of  those  who  lived  in 
England  and  "Wales  six  centuries  ago,  but  whose  condition  is 
more  destitute,  whose  homes  are  more  squalid,  whose  incomes 
are  more  uncertain,  whose  prospects  are  more  hopeless  than 


J2- 


14  THE  DISTRIBUTION   OF  WEALTH. 

those  of  the  poorest  serfs  of  the  Middle  Ages  and  the  meanest 
drudges  of  the  mediaeval  cities.  The  arm  of  the  law  is  strong 
enough  to  keep  them  under,  and  society  has  no  reason  to  fear 
their  despair ;  but  I  refuse  to  accept  the  superficial  answer  that 
a  man  is  an  admirer  of  the  good  old  times,  because  he  insists 
that  the  wants  of  civilization  should  be  examined  along  with 
and  not  apart  from  its  failures." 

Speaking  of  the  earlier  part  of  the  nineteenth  century,  he 
says,  "That  the  patents  of*Arkwright  and  Peel  secured  enor- 
mous fortunes  to  those  inventors,  or  purchasers  of  inventions, 
we  all  know;  that  they  ultimately  cheapened  production  is 
equally  clear ;  that  they  gave  England  well-nigh  a  monopoly  in 
the  supply  of  textile  fabrics  is  as  manifest;  but  it  does  not 
strictly  follow  that  the  English  workman  was  better  paid.  The 
hand-loom  weaver  was  undoubtedly  impoverished ;  but  I  do  not 
find  that  the  machine  weaver  bettered  his  position.  His  wages 
remained  low ;  his  means  were  ever  straitened  ;  and  the  misery 
of  the  manufacturing  districts  was  greater  even  than  that  of 
the  agricultural." 

Speaking  of  the  agricultural  classes,  he  says,  "  The  condition 
of  the  agricultural  laborer  has  been  different  from  that  of  the 
artisan.  Scattered  and  incapable  of  combined  action  with  his 
fellows,  bowed  down  by  centuries  of  oppression,  hard  usage,  and 
hard  words ;  with,  as  he  believes,  every  social  force  against  him, 
the  landlord  in  league  with  the  farmer,  and  the  clergyman  in 
league  with  both,  the  latter  constantly  preaching  resignation, 
and  the  two  former  constantly  enforcing  it,  he  has  lived  through 
evil  times." 

Speaking  of  the  agricultural  laborers  in  England,  Mr.  Adam 
Badeau,  in  his  "  Aristocracy  in  England,"  says,  "  In  1880  the 
average  wages  of  the  agricultural  laborer,  the  man  who  worked 
the  two  thousand  million  acres  of  land  and  produced  the  three 
hundred  and  thirty  million  dollars  of  revenue,  was  fourteen 
English  shillings  a  week,  or  about  fifty  cents  a  day ;  out  of  this 
he  had  to  pay  his  rent  to  the  earl  or  duke,  which  was  two  Eng- 
lish shillings,  or  fifty  cents  a  week.  Bread  was  three  cents  a 
pound,  meat  eighteen  cents,  and  butter  one  shilling  and  eight 
pence, — about  forty  cents. 

"I  heard  viscounts  and   baronets,   and  bishops  and  earls, 


THE  DISTRIBUTION  OF  WEALTH.  15 

lamenting  the  misery  and  depravity,  the  poverty  and  low  wages 
of  the  wretches  who  lived  on  thoir  estates.  I  heard  them  admit 
that  in  their  part  of  the  country  a  shilling  (twenty-four  cents) 
a  day  was  often  the  wages  of  a  strong,  healthy  man,  who  had  a 
wife  and  six  or  seven  children  to  support,  out  of  which,  I  heard 
them  say,  at  least  a  shilling  a  week  was  deducted  for  rent.  I 
heard  that  whole  families  occupied  a  single  bedroom.  I  heard 
of  the  ignorance  and  stolidity,  often  the  brutality,  of  the  English 
peasants,  of  whom  there  are  several  millions." 

This  is  England,  that  for  centuries  has  stood  first  among  the 
nations  in  moral,  social,  and  religious  culture,  and  has  led  the 
world  in  the  development  of  the  practical  sciences,  in  industrial 
growth,  and  the  accumulation  of  wealth ;  England,  whose  peo- 
ple are  practically  as  free  as  the  people  of  the  United  States, 
whose  policies,  more  than  those  of  any  other  nation,  have  been 
shaped  in  harmony  with  the  orthodox  theories  of  political 
science,  and  where  the  doctrine  of  laisser  faire,  or  free  and  un- 
restricted play  of  economic  forces,  so  devoutly  cherished  by 
writers  on  political  economy,  has  held  the  most  complete  sway. 
The  people  of  the  United  States  are  travelling  along  the  same 
highway,  and  are  rapidly  nearing  the  same  end.  American 
works  on  political  science,  which  have  been  in  no  small  measure 
our  guides  in  legislative  policy,  have  been  given  us  by  college 
professors  whose  characteristic  function  it  is  to  perpetuate  an- 
cient languages  and  ancient  doctrines.  Orthodox  by  profession, 
conservative  by  habit,  they  stand  like  painted  sign-boards, 
pointing  down  the  old  travelled  road.  It  is  a  needed  service 
well  performed.  But,  knowing,  as  we  now  do,  where  that  old 
road  leads,  it  is  time  to  stop  and  consider  whether  we  will  to  go 
that  way,  or  whether  we  shall  alter  our  destination  and  change 
our  course  along  some  new  highway,  where  the  sign-boards  have 
not  yet  been  put  up. 

The  statistics  of  our  national  wealth,  our  commerce,  our  man- 
ufactures, our  agriculture,  are  constantly  paraded  before  us  to 
excite  our  wonder  and  challenge  our  admiration.  It  may  gratify 
our  pride  to  know  that  in  the  race  for  wealth  and  power  we  are 
outrunning  the  nations  of  Europe ;  but  the  question  that  con- 
cerns most  the  social  philosopher,  or  intelligent  patriot,  is  what 
progress  the  people  are  making  towards  a  life  unworn  by  ex- 


16  THE   DISTRIBUTION  OP   WEALTH. 

hausting  toil,  unfettered  by  needless  anxieties, — that  condition 
which  shall  extend  and  widen  the  opportunities  for  social  culture 
and  moral  and  intellectual  growth. 

Political  economy  has  been  most  frequently  discussed  in  its 
relation  to  the  growth  of  the  industries  and  the  increase  of 
national  wealth.  The  classes  by  whose  labor  wealth  is  created 
have  been  considered  along  with  lands  and  chattels  as  important 
factors  in  the  production  of  wealth ;  but  their  own  well-being 
has  been  too  often  regarded  only  in  its  relations  to  production, 
and  without  independent  consideration  of  the  moral  and  social 
welfare  of  the  common  people.  But  much  attention  has  been 
given  by  recent  writers  to  the  study  of  economic  questions,  with 
the  distinct  purpose  of  ascertaining  what,  if  anything,  may  be 
done  to  ameliorate  the  condition  of  the  laboring  classes.  The 
growth  of  wealth  in  the  hands  of  a  relatively  small  number  of 
persons  has  been  so  unprecedented,  so  out  of  all  proportion  to 
the  services  which  these  persons  may  be  supposed  to  have  ren- 
dered, the  power  which  they  have  thus  acquired  over  the  for- 
tunes of  others  has  become  so  threatening,  as  to  weaken  faith 
in  some  of  the  dogmas  which,  for  nearly  a  century,  have  been 
accepted  as  ultimate  truths  of  political  science.  There  is  a  feel- 
ing of  alarm,  a  sense  of  something  wrong  in  the  adjustment  of 
social  forces. 

Mr.  Carnegie,  in  the  North  American  Review^  tells  us  that 
"the  contrast  between  the  palace  of  the  millionaire  and  the 
cottage  of  the  laborer,  with  us  to-day,  measures  the  change 
which  has  come  with  civilization."  How  much  civilization  has 
done  for  the  millionaire,  and  how  little  for  the  laborer! 

Mr.  Carnegie  devotes  several  pages  of  the  Review  to  the 
consideration  of  the  question  as  to  what  millionaires  should  do 
with  their  excesses  of  wealth.  He  decides  that  it  is  not  to  be 
bestowed  in  alms ;  since,  out  of  every  thousand  dollars  spent  in 
so-called  charity,  nine  hundred  and  fifty  are  unwisely  spent; 
but  that  it  should  be  devoted  to  the  endowment  of  colleges  or 
building  of  churches,  or  be  bestowed  on  cities  in  the  form  of 
public  parks  and  libraries  ;  not  forgetting  to  suggest  that  a  com- 
munity cannot  "  pay  a  more  graceful  tribute  to  the  citizen  who 
presents  it  than  to  give  his  name  to  the  gift,"  nor  failing  to  re- 
mind the  beneficently-inclined  millionaire  of  the  "  admiration  of 


THE  DISTRIBUTION  OF  WEALTH.  17 

his  fellow-men,"  which  inures  to  the  bestower  of  princely  gifts. 
It  is  some  satisfaction  to  learn  that  millionaires  who  regard  as- 
sistance rendered  to  the  weak  and  unfortunate,  without  recom- 
pense other  than  the  fleeting  gratitude  of  suffering  women,  or 
the  cheap  generosity  of  impoverished  manhood,  as  wasted 
charity, — wasted  because,  poured  into  a  sea  of  misery  and  want, 
it  does  not,  like  a  palace  of  stone,  or  a  public  park,  endure  to 
proclaim  to  the  world  the  generosity  of  the  giver, — may,  in  con- 
sideration of  a  substantial  guarantee  of  posthumous  fame,  be 
induced  to  devote  to  a  worthy  purpose  a  part  of  their  surplus 
wealth.  If  Mr.  Carnegie  has  not  overestimated  the  vanity  of 
those  to  whom  his  appeal  is  addressed,  within  the  next  half- 
century  the  names  of  dead  millionaires  may  be  as  thoroughly 
advertised  as  medical  panaceas  are  to-day,  and  their  virtues  as 
loudly  and  as  truthfully  proclaimed. 

Mr.  Carnegie  does  not  mistake  the  tendency  of  popular 
thought,  when  he  says,  "  There  will  be  nothing  to  surprise  the 
student  of  socialogical  development,  if  society  should  soon  ap- 
prove the  text  which  has'caused  so  much  anxiety,"  "  It  is  easier 
for  a  camel  to  go  through  the  eye  of  a  needle,  than  for  a  rich  man 
to  enter  into  the  Kingdom  of  God."  Not  that  society  is,  at 
present,  disposed  to  unreasonable  extremes,  or  to  rest  its  claims 
upon  the  authority  of  scriptural  texts ;  but  the  people  are  con- 
scious that  there  is  somewhere  a  grave  wrong;  they  are  in 
doubt  as  to  the  cause  and  uncertain  as  to  the  remedy.  They 
arc  studying  the  symptoms  in  the  old  family  almanac,  and  are 
confused  by  the  number  of  sure  cures ;  but  they  are  going  to 
try  something. 

The  tariff,  the  railroads,  the  merchants,  taxation,  are  each 
assailed  in  turn  as  the  cause  of  the  admitted  evil.  The  farmer, 
who  has  been,  perhaps,  the  greatest  sufferer,  organized  first 
against  the  railroads.  Freights  have  fallen  until  they  are  now 
less  than  half  what  they  were  in  1869,  and  a  ton  of  freight  is 
moved  a  mile  for  less  than  a  cent ;  but  the  farmer  has  found  no 
relief.  Seeing  in  the  retail  merchant  the  enemy  of  his  pros- 
perity, he  has  organized  co-operative  stores  and  farmer's'  stores, 
where  he  may  buy  goods  at  an  advance  of  ten  per  cent,  above 
cost.  This  remedy,  too,  has  proved  a  failure.  He  is  now  urged 
to  an  attack  on  the  protective  tariff,  and,  other  remedies  failing, 


18  THE   DISTRIBUTION   OF   WEALTH. 

he  may  be  persuaded  to  try  the  experiment.  The  silver  man 
and  the  paper-money  man  each  has  his  special  theory,  which  he 
deems  adequate  to  explain  the  cause  of  existing  evils. 

The*  workingmen  in  manufacturing  and  mining  industries, 
and  those  engaged  in  railway  service,  have  sought  relief  in 
strikes,  and  no  doubt  have  thereby  maintained  wages  in  these 
industries  at  a  point  above  the  rates  to  which  wages  would 
have  fallen,  except  for  the  organized  protest  of  the  wage 
earners.  Such  remedies  are,  however,  temporary  in  effect  and 
unsatisfactory  in  results. 

The  aggregation  of  wealth  is  not  peculiar  to  any  one  country, 
though,  for  obvious  reasons,  it  has  proceeded  more  rapidly  in 
the  United  States  than  in  any  of  the  older  nations  of  Europe. 
It  is  the  effect,  not  of  local  or  temporary  causes,  but  the  essen- 
tial product  of  economic  forces  everywhere  operative,  and 
producing  the  same  results,  except  as  counteracted  by  hindering 
forces.  It  therefore  becomes  necessary  to  recur  to  the  exami- 
nation of  first  principles,  the  underlying  laws  which  control  the 
creation  and  distribution  of  wealth,  before  we  shall  be  prepared 
to  inquire  as  to  the  remedy,  if  there  be  any  remedy,  that  would 
be  effective  and  practicable. 

When  Adam  Smith  wrote  the  "Wealth  of  Nations,"  the 
important  inquiry  was  how  to  create  wealth.  That  question 
has  been  fully  answered  by  the  invention  of  labor-saving  ma- 
chinery, the  steamship,  the  railway,  and  the  telegraph.  The 
inquiry  now  is,  how  may  wealth  be  distributed,  so  that  he 
who  creates  it  may  enjoy  it  ?  how  shall  the  labor  of  the  nation 
be  distributed  so  that  equal  opportunities  may  be  open  alike  to 
all  ?  Mill,  in  his  "  Political  Economy,"  says,  "  The  observations 
in  the  preceding  chapter  had  for  their  principal  object  to 
deprecate  a  false  ideal  of  human  society.  Their  applicability  to 
the  practical  purposes  of  the  present  times  consists  in  moder- 
ating the  inordinate  importance  attached  to  the  mere  increase  of 
production,  and  fixing  attention  on  improved  distribution  and 
large  remuneration  of  labor  as  the  two  desiderata.  Whether 
the  aggregate  produce  increases  absolutely  or  not  is  a  thing  in 
which,  after  a  certain  amount  has  been  obtained,  neither  the 
legislator  nor  the  philanthropist  need  feel  any  strong  interest ; 
but  that  it  should  increase  relatively  to  the  number  of  those 


THE   DISTRIBUTION  OF   WEALTH.  19 

who  share  it  is  of  the  utmost  possible  importance ;  and  this 
(whether  the  wealth  of  mankind  be  stationary  or  increasing  at 
the  most  rapid  rate  ever  known  in  an  old  country)  must  depend 
upon  the  opinions  and  habits  of  the  most  numerous  class,  the 
class  of  manual  laborers." 

Edward  Atkinson  says,  "The  production  of  what  consti- 
tutes wealth  or  welfare  is  no  longer  at  issue ;  modern  science 
and  modern  instrumentalities  of  production  are  adequate  to 
produce  what  would  suffice  for  a  good  subsistence  for  every 
man,  woman,  and  child  in  any  and  all  countries.  The  whole 
question  at  issue  is  the  distribution  of  this  subsistence  after  it 
has  been  produced." 

The  inquiry  pursued  in  the  following  pages  will  be  confined 
chiefly  to  the  question  of  the  distribution  of  wealth,  and  the 
causes  by  which  distribution  is  determined.  It  is  impracticable, 
however,  to  consider  distribution  wholy  apart  from  production. 
They  are  essentially  involved  together,  and  must  be  carried  on, 
each  in  immediate  relation  to  the  other.  The  nature,  extent, 
and  effect  of  the  aggregation  of  wealth,  the  limitations  of 
wealth,  commerce,  protection,  taxation,  and  interest  on  credits 
are  necessarily  embraced  within  the  scope  of  the  inquiry  upon 
which  we  enter. 

The  subject  of  political  economy  is  one  which  concerns  the 
welfare  of  every  citizen,  but  which,  nevertheless,  possesses  little 
attraction,  except  for  those  who  have  made  it  the  subject  of 
special  study,  and  most  readers  are  disposed  to  avoid  a  discus- 
sion of  abstract  theories  which  impose  the  necessity  of  a  sus- 
tained effort  to  comprehend  and  apply  them.  I  have,  therefore, 
in  the  following  pages,  sometimes  departed  from  the  usual 
methods  pursued  in  the  discussion  of  questions  of  economic 
science,  and  endeavored,  by  means  of  somewhat  elaborate  and 
sometimes  commonplace  illustrations,  to  bring  the  subject  within 
the  more  ready  grasp  of  those  who  are  unfamiliar  with  the  gen- 
eral principles  of  political  economy.  For  like  reason,  the  dis- 
cussion has  not  been  conducted  throughout  in  that  subdued 
monotone  regarded  as  best  befitting  a  calm  and  impartial  logic. 
Nevertheless,  care  has  been  observed  to  avoid  inaccuracy  of 
statement,  or  argument  which  will  not  bear  the  test  of  analysis. 

I  believe  that  the  working-people  in  the  United  States  and 


20  THE  DISTEIBUTION   OF  WEALTH. 

throughout  Europe  are  suflFering  grave  wrongs,  for  which  there 
may  be  found  an  effective  and  practicable  remedy.  I  believe 
that  prevailing  doctrines  of  economic  science,  although  ema- 
nating from  eminent  writers  who  are  both  earnest  and  sincere, 
have  been  fashioned  in  harmony  with  the  interests  of  the  con- 
trolling classes.  I  do  not  believe  that  it  is  one  of  the  essential 
requirements  of  civilization  that  the  enduring  products  of  the 
toil  of  millions  of  people,  which  represent  the  savings  of  labor 
from  year  to  year,  should  be  gathered  and  appropriated  by  a  few. 
I  do  not  believe  that  any  man  ever  earned  or  was  justly  entitled 
to  a  fortune  of  millions.  I  do  not  believe  in  any  law  of  inheri- 
tance whereby  wealth  without  limit  may  be  transmitted  from 
generation  to  generation  in  uninterrupted  succession.  I  believe 
in  a  policy  which  will  tend  to  level  down  all  those  gross  ine- 
qualities that  spring  from  the  accident  of  birth  or  chance  oppor- 
tunity. I  believe  in  a  free  and  fair  competition  as  essential  to 
a  healthy  social  and  industrial  life,  and  in  guarding  the  rights 
of  every  man  to  the  acquisitions  of  industry,  enterprise,  and 
skill.  But  the  scheme  of  social  order,  to  which  the  industrial 
life  of  every  individual  must  conform,  is  in  part  conventional 
and  artificial,  and  is  essentially  imperfect;  and  he  who  takes 
advantage  of  its  imperfections  to  gather  to  himself  that  which 
in  equity  belongs  to  others,  should  be  held  in  check  by  limita- 
tions which  leave  room  and  scope  enough  for  all  the  accumula- 
tions which  may  be  fairly  set  down  to  the  credit  of  industry, 
skill,  or  exceptional  enterprise,  but  interpose  an  impassable  bar- 
rier to  the  increase  of  wealth  beyond  that  point  where  it  repre- 
sents only  unjust  gains  gathered  from  the  weaker  members  of  a 
great  industrial  copartnership. 

I  am  aware  that  the  more  wealthy  members  of  society,  sus- 
tained by  the  orthodox  doctrines  of  political  economy,  are  gen- 
erally prompt  to  attribute  the  great  existing  inequalities  of 
wealth,  and  the  impoverished  and  dependent  condition  of  the 
industrial  classes,  to  the  imperfections  of  human  nature;  but 
I  am  not  aware  that  there  ever  has  at  any  time  been  made  mani- 
fest a  disposition  on  their  part  to  relieve  the  weaker  members 
of  society  from  the  weight  of  unjust  burdens.  They  hold  on, 
guarding  with  tenacious  vigilance  all  the  advantages  which 
they  have  secured.     Never  yet  has  there  been  made  an  earnest, 


THE  DISTRIBUTION  OP  WEALTH.  21 

persistent  effort  in  behalf  of  the  working-people,  to  place  them 
on  the  vantage-ground  of  equal  opportunity.  Their  advance  is 
held  in  check  by  the  operation  of  economic  laws  developed  out 
of  conditions  which,  except  in  the  United  States,  they  have  been 
without  the  power  to  change.  When  they  have  been  brought 
to  understand  the  origin  of  the  evils  that  weigh  them  down 
and  obstruct  their  advance,  it  must  not  be  expected  that  they 
will  continue  to  endure  burdens  which  they  have  the  power  to 
cast  off.  I  do  not  believe  that  the  working-people  of  the  United 
States  will  long  continue  to  permit  the  present  aggregation  of 
wealth  to  go  on.  They  must  perceive  that  their  opportunities 
are  growing  less  and  less,  and  that  they  are  rapidly  nearing  that 
condition  of  absolute  dependence  which  environs  the  masses  of 
working-people  of  Europe  to-day. 

Among  recent  contributions  to  the  science  of  political  economy 
in  its  modern  phases,  those  of  Edward  Atkinson  are  deserving 
of  special  attention.  Mr.  Atkinson  is  a  patient  investigator  of 
facts,  whose  conclusions  are  generally  well  supported,  if  not 
always  satisfactorily  demonstrated.  But  the  final  deduction 
which  he  draws,  and  which  it  appears  to  be  his  leading  purpose 
to  sustain, — viz.,  that  the  present  distribution  of  the  products  of 
labor  is,  in  the  main,  equitable,  and  that  improvement  in  the 
condition  of  the  laboring  classes  must  await  the  slow  process  of 
education  and  social  evolution,  and  may  not  be  aided  by  legis- 
lative interference, — appears  to  me  to  be  a  leap  beyond  the  legit- 
imate conclusion  of  his  argument. 

Mr.  Andrew  Carnegie  is  the  author  of  a  swaggering  book 
entitled  "Triumphant  Democracy,"  an  exulting  paean  to  the 
progress  of  the  young  republic,  in  which,  after  properly  humil- 
iating the  effete  monarchies  of  Europe  by  a  calcium-light  display 
of  our  territorial  bigness,  he  exhibits  in  one  dazzling  panorama 
a  complete  collection  of  our  worldly  possessions.  Though  the 
style  is  somewhat  suggestive  of  the  show-bills  of  the  "  biggest 
show  on  earth,"  the  book  is  both  instructive  and  entertaining. 
Mr.  Carnegie  is  a  domesticated  Scotchman,  who  has  chanced  to 
draw  a  lucky  number  in  the  lottery  of  life,  and  like  the  country- 
man who,  by  a  lucky  turn  of  the  wheel  of  fortune  at  an  agri- 
cultural fair,  has  drawn  the  capital  prize,  he  enjoys  the  show, 
and  feels  a  swelling  pride  as  he  views  the  big  pumpkins  and  fat 


22  THE  DISTRIBUTION  OF  WEALTH. 

Berkshires  which,  however,  fail  to  arouse  the  enthusiasm  of 
the  unfortunate  wight  who  risked  his  money  on  the  wrong 
number. 

Mr.  Carnegie  organizes  a  street-parade.  Says  he,  "  Were  the 
live  stock  upon  Uncle  Sam's  estate  ranged  five  abreast,  each 
animal  estimated  to  occupy  a  space  five  feet  long,  and  marched 
around  the  world,  the  head  and  tail  of  the  procession  would 
overlap.  This  was  the  host  of  1880 ;  that  of  1885  would  be  ever 
so  much  the  greater ;  and  still  it  grows  day  by  day,  and  the  end 
of  its  growth  no  man  can  foretell." 

Mr.  Carnegie's  book  is  a  complete  and  reliable  exposition  of 
the  wealth  and  resources  of  the  United  States,  and  only  serves 
to  increase  our  wonder  that,  in  a  countrj^  whose  resources  ap- 
pear to  be  unlimited,  where  the  arts  of  production  have  reached 
their  highest  development,  and  where  wealth  displays  its  mag- 
nificence on  every  hand,  penury  and  want  should  abide ;  that 
even  here,  above  the  joyous  laughter  of  peace  and  plenty,  above 
the  hum  of  factories  and  the  roar  of  furnaces,  should  be  heard 
the  discordant  mutterings  of  discontent. 

The  phenomenal .  success  of  some  who  begin  life  as  poor 
boys,  and  afterwards  attain  to  the  rank  of  millionaires,  which 
is  often  cited  as  evidence  of  the  possibilities  of  exceptional  in- 
dustry and  worth,  proves  not  that  all  may  become  millionaires, 
nor  that  the  reasonable  rewards  of  industry  and  skill  are  sure, 
but  only  this,  that  the  hard-earned  dollars  of  a  thousand  men, 
even  in  America,  may  become  the  booty  of  the  daring  brigand. 
Mr.  Carnegie,  like  others  who  have  written  panegyrics  upon 
the  phenomenal  growth  of  our  national  wealth,  does  not  seem  to 
realize  that  the  larger  the  capital  prizes  are,  which  are  drawn 
in  the  lottery  of  fortune,  the  greater  the  number  of  the  blanks ; 
and  that  those  who  have  drawn  blanks  are  not  in  the  mood  to 
join  him  in  a  wild  and  reckless  dance  of  joy,  inspired  by  a  con- 
templation of  the  wealth  whose  magnificence  is  but  a  measure 
of  the  booty  gathered  by  capital  and  cunning  in  a  war  against 
labor, — an  honorable  war  for  the  most  part,  maybe,  conducted 
according  to  the  time-honored  laws  of  trade,  but  a  war  of  con- 
quest and  aggrandizement  nevertheless,  that  has  left  sorrow  and 
suffering  and  blasted  hopes  in  its  trail.  The  exultant  shouts  of 
the  victors  on  their  triumphal  march  may  resound  loud  and  far ; 


THE  DISTBIBUTION  OF  WEALTH.  28 

but  the  tumult  and  clang  of  all  this  boastful  rejoicing  are  com- 
mingled with  the  moans  of  the  vanquished. 

Tlie  writings  of  Mr.  Henry  George  upon  economic  subjects, 
"  Progress  and  Poverty,"  "  Social  Problems,"  etc.,  are  all  worthy 
of  attention.  Mr.  George's  writings  are  often  instructive  and 
always  entertaining ;  his  argument  is  generally  well  sustained, 
and,  although  it  may  not  convince,  must  command  the  thought- 
ful consideration  of  the  candid  reader.  Logical  in  method  and 
loyal  to  his  own  convictions,  he  offends  neither  the  taste  nor  the 
intelligence  of  his  readers  by  a  resort  to  the  shallow  devices  of 
the  literary  charlatan.  His  works  possess  value,  not  only  on  ac- 
count of  their  literary  merit,  but  also  because  of  their  vivid 
portrayal  of  existing  evils. 

I  cannot,  however,  give  assent  to  the  leading  doctrine,  the 
conclusion  about  which  Mr.  George  has  grouped  all  his  facts  and 
arguments.  He  traces  the  unequal  distribution  of  wealth,  and 
the  extremes  of  poverty  developed  under  existing  conditions,  to 
monopoly  in  the  ownership  of  land,  and  proposes  as  a  remedy 
the  abolition  of  private  ownership,  or  measures  which  are 
equivalent  thereto.  He  finds  no  fault  with  usury,  nor  with  ex- 
isting laws  of  finance,  but,  consistent  with  his  idea  of  a  single 
tax  on  land,  he  favors  the  abolition  of  all  customs  duties,  and 
the  removal  of  all  restrictions  on  trade. 

To  one  who  stands  beneath  the  glare  of  an  electric  light,  those 
objects  within  the  illumined  space  are  rendered  unusually  vivid 
and  distinct;  while  the  darkness  beyond  looks  all  the  more 
black  and  dense;  and  the  figures  in  the  shadows  take  on  the 
shapes  that  fancy  gives  them.  Mr.  George  possesses  a  keen 
perception  and  a  glowing  imagination;  and  his  logic  is  some- 
times dazzled  by  the  glare  of  his  brilliant  rhetoric.  He  sees 
clearly,  and  portrays  with  fidelity,  those  objects  that  fall  within 
the  illumined  space  about  him  ;  but  the  dim,  half-lighted  gloam- 
ing that  fringes  the  outer  bounds  of  his  vision  he  peoples  with 
pessimistic  spectres,  weird  and  gaunt,  to  trouble  and  affright  us ; 
and  the  reader  who  follows  him  to  the  end  may  be  somewhat  in 
doubt  whether  he  be  a  veritable  seer,  or  only  a  man  who  has 
been  startled  by  a  ghost.  But,  whether  seer  or  alarmist,  or 
somewhat  of  both,  Mr.  George  is  an  accomplished  writer  with 
the  power  to  command  attention,  and  intensely  in  earnest,  and 


24  THE  DISTRIBUTION   OF  WEALTH. 

no  writer  has  done  more  to  push  to  the  front  the  questions  con- 
cerning capital  and  labor  that  are  now  claiming  universal 
attention. 

In  the  year  1849,  Edward  Kellogg  published  a  book  entitled 
"Labor  and  Capital,"  which  has  since  been  republished.  It 
attracted  little  attention  at  the  time  of  its  first  appearance,  there 
being  then  no  awakened  interest  on  the  subjects  discussed. 
Mr.  Kellogg  exhibits  the  rapid  growth  of  aggregated  wealth 
up  to  the  time  of  his  writing,  and  the  relative  increase  of 
poverty  among  the  masses  of  the  people.  The  remedy  proposed 
by  him  is  a  practical  abolition  of  interest ;  and  he  elaborates  a 
scheme  by  which  he  claims  that  interest  may  be  reduced  to  the 
rate  of  one  and  one-tenth  per  cent,  per  annum.  The  book  is 
the  product  of  the  patient  study  and  observation  of  a  man  of 
wide  business  experience,  is  clearly  written,  and  deserves  to  be 
read.     It  was  republished  in  1874. 

One  of  the  best  discussions  of  the  tariff,  from  the  stand-point 
of  the  protectionist,  will  be  found  in  a  work  by  Mr.  Henry  M. 
Hoyt,  published  in  1886,  entitled  "Protection  vs.  Free  Trade." 
The  opposing  view  is  strongly  supported  in  the  work  of  Henry 
George,  entitled  "  Protection  or  Free  Trade,"  published  also  in 
1886. 

In  all  standard  works  on  the  subject  of  political  economy  the 
doctrines  of  protection  and  free  trade  are  discussed,  the  argu- 
ment being  generally  that  of  the  English  free-trade  school  with 
which  the  reading  public  have  long  been  familiar.  Henry  C. 
Carey,  who  is  a  protectionist,  treats  the  subject  historically, 
and  supports  his  view  with  an  extended  array  of  facts.  The 
most  complete  historical  treatise  is  perhaps  the  special  work  of 
E.  W.  Thompson,  published  in  1888.  "  The  History  of  the 
Tariff,"  by  F.  W.  Taussig,  is  well  written  and  reliable.  Horace 
Greeley,  in  his  work  on  "  Political  Economy,"  contributes  valu- 
able thought  to  the  discussion. 

As  a  general  treatise  on  the  subject  of  political  economy, 
"  Elements  of  Political  Economy,"  by  Francis  Wayland,  recast 
by  Chapin,  although  designed  for  a  school-book,  possesses  much 
merit,  and  is  as  comprehensive  in  scope  as  many  of  the  more 
pretentious  works. 

"  Principles  of  Political  Economy,"  by  John  Stuart  Mill,  pub- 


THE  DISTRIBUTION  OP  WEALTH.  25 

lisbed  in  1848,  has  perhaps  received  a  wider  acceptance  than 
any  other  work  on  that  subject  except  that  of  Adam  Smith's 
«  Wealth  of  Nations."  Mill's  style  is  clear  and  attractive,  and 
his  views  are  comprehensive.  As  a  general  exposition  of  eco- 
nomic science  his  work  is  not  excelled  by  that  of  any  modern 
author. 


CHAPTEE  II. 

CHANGED   CONDITIONS. 

In  the  United  States,  within  the  last  fifty  years,  there  has 
been  a  development  of  industry  and  a  growth  of  wealth  wholly 
unprecedented  in  the  world's  history.  We  are  accustomed  to 
regard  this  inordinate  increase  of  wealth  as  the  measure  of  our 
progress  in  the  line  of  an  improved  civilization,  and  to  speak  of 
the  great  gain  as  a  blessing  enjoyed  in  common  by  the  whole 
people. 

That  there  have  been  secured  to  the  masses  of  the  people 
opportunities  for  increased  enjoyment  as  common  privileges  of 
all,  and  that  the  average  amount  of  toil  required  for  the  main- 
tenance of  the  family  has  diminished,  there  can  be  no  question. 
But,  with  all  the  multiplication  of  wealth,  and  increased  power 
of  labor  through  the  employment  of  ingenious  machinery  and 
the  use  of  electricity  and  steam,  there  have  come  also  changed 
conditions  and  new  relations.  The  entire  country  has  been 
interlaced  with  lines  of  railway ;  distance  has  been  annihilated  j 
New  York  and  San  Francisco,  Chicago  and  New  Orleans  speak 
together  as  neighbors  standing  face  to  face ;  the  products  of 
one  section  are  carried  a  thousand  miles  as  readily  as  formerly 
they  might  have  been  hauled  the  distance  of  a  day's  drive,  and 
are  distributed  throughout  the  nation  in  universal  competition 
with  the  products  of  every  other  section.  Dakota  raises  wheat 
for  Massachusetts;  Massachusetts  makes  shoes  for  California. 
Flour  from  the  mills  of  Wisconsin  competes  with  the  flour  of 
the  mills  of  Pennsylvania,  ground  from  wheat  grown  within  a 
stone's  throw  of  the  latter,  in  the  little  stores  in  the  village  near 
by.    The  clothing  we  wear  is  manufactured  five  hundred  or  a 


26  THE  DISTRIBUTION  OF  WEALTH. 

thousand  miles  away;  the  wagons  and  ploughs,  reapers  and 
mowers  of  the  farmers  on  the  prairies  of  Kansas  and  Nebraska 
are  built  in  the  workshops  of  Ohio.  On  the  same  day,  in  any 
little  village,  may  be  found  commercial  travellers  from  places 
five  hundred  miles  apart,  competing  with  each  other  in  the 
sale  of  the  same  articles  of  manufacture.  The  mechanic  of 
Kew  England  finds  his  customers  in  Iowa  and  Illinois,  and 
the  farmer  of  Illinois  finds  a  market  for  his  grain  among  the 
hills  of  Vermont. 

The  independence  of  communities  has  been  destroyed,  and 
every  man  has  become  but  a  part,  one  of  sixty  million  factors, 
in  a  universal  system  of  production  and  exchange.  His  com- 
petitors are  no  longer  his  neighbors;  they  are  men  in  New 
York,  Massachusetts,  Ohio,  and  Illinois.  The  power  of  indi- 
viduals is  no  longer  circumscribed  within  the  limits  of  small 
localities.  The  people  of  a  mighty  nation  have  been  woven 
together  in  a  web  of  interdependent  relations,  that  may  be  held 
in  the  grasp  of  a  single  hand,  and  converted  into  a  tossing 
blanket  by  the  Samsons  of  commerce. 

Increased  opportunities  for  trade  have  opened  the  way  to 
unlimited  acquisitions  of  wealth,  and  the  fruits  of  a  nation's  toil 
are  gathered  by  the  skilful  and  the  unscrupulous  alike,  and 
piled  in  heaps  of  imposing  grandeur  beyond  the  reach  of  a 
struggling  crowd  of  dependent  poor. 

The  Napoleons  of  commerce  lay  tribute  at  will  on  a  nation's 
trade,  and  augment  their  stores  of  wealth  with  a  speed  that 
increases  in  accelerated  ratio  as  their  fortunes  grow. 

In  the  place  where  once  sat  the  village  shoemaker  now  sits 
the  cobbler,  sewing  ripped  seams  and  patching  holes  in  old 
shoes.  In  the  place  of  a  dozen  wagon-makers  is  a  man  putting 
new  spokes  in  old  wheels,  tightening  tires,  or  renewing  worn-out 
axles. 

The  blacksmith  has  become  a  shoer  of  horses  or  a  sharpener 
of  ploughs.  The  tailor  is  almost  extinct.  He  is  still  found  in 
cities,  from  whence  he  goes  forth  at  intervals,  with  his  samples 
and  his  tape,  to  take  the  dimensions  and  estimate  the  superficial 
area  of  a  few  patrons,  whose  tastes  are  beyond  the  range  of  the 
ready-made  clothing  store,  whose  articles  of  apparel  are  cut  to 
fit  the  composite  man  of  the  period.     The  chair-maker  and  the 


THE  DISTRIBUTION  OP  WEALTH.  27 

weaver  are  but  faded  memories;  and  the  cabinet-maker  has 
given  way  to  the  undertaker,  who  sells  ready-made  coffins,  and 
rides  in  state  on  funeral  days.  The  millwright  was  driven  out 
by  the  roller  process  ;  and  the  ranks  of  the  house-painter  have 
been  decimated  in  a  disastrous  war  with  mixed  paints.  The 
mason  and  carpenter  are  still  on  dry  ground  above  the  flood  of 
progress  that  has  swept  away  their  brother  artisans,  though 
many  of  their  possessions  also  have  been  carried  away  on  the 
swelling  tide.  The  horse-rake,  the  two-horse  cultivator,  the 
mower,  twine-binder,  and  steam-thresher  have  taken  the  place 
of  men ;  and  the  farmer  buys  his  fence  at  the  hardware  store,  in 
a  roll  of  jagged  wire. 

Manufacturing  industries  have  abandoned  the  country  village, 
and  gathered  the  people  under  the  smoke  of  mighty  cities. 
The  city  has  grown  and  the  village  decayed.  In  the  place  of 
a  host  of  artisans,  who  once  clustered  in  every  hamlet,  breaking 
the  dull  uniformity  of  village  life  with  a  variety  of  employment 
and  a  diversity  of  experience,  we  have  duplicates  of  the  village 
merchant,  who  for  twenty  per  cent,  stands  guard  over  a  stock 
of  foreign  wares  which  he  vends  for  cash  or  exchanges  for 
butter  and  eggs ;  while  the  city  has  grown  monotonous  in  its 
confusion  of  over-abundant  variety  that  satiates  and  cloys  the 
senses  like  a  museum  of  curiosities  gathered  for  show. 

This  is  truly  an  era  of  material  ideas,  aims,  and  ambitions. 
Every  man  has  become  a  factor  in  an  immense  money-making 
scheme, — a  wheel  in  the  great  industrial  machine.  The  life  of 
each  has  become  a  part  of  an  universal  routine.  He  moves  along 
well-defined  paths  marked  out  for  him  by  the  shaping  hand  of 
a  material  destiny,  reading  as  he  goes  the  familiar  admonition, 
"  Keep  off  the  grass." 

In  the  industrial  world  everything  is  now  done  by  machin- 
ery. Each  worker  performs  an  assigned  part;  and  his  labor 
is  of  value  only  in  unison  with  that  of  many  others.  His  work 
is  often  one  continued  round  of  repetition  requiring  no  thought 
and  little  skill.  He  learns  no  trade  that  can  be  carried  on  inde- 
pendent of  costly  machinery,  which  must  form  a  part  of  a  man- 
ufacturing establishment  requiring  large  capital  to  own  or  to 
operate.  He  cannot  work  without  permission ;  he  must  first  be 
employed.    He  is  one  of  a  brigade,  all  moving  together  under 


28  THE  DISTRIBUTION   OF  WEALTH. 

the  command  of  a  single  head.  He  works  for  stipulated  wages, 
and  has  no  control  over  the  product  of  his  labor. 

For  the  opportunity  to  work  he  may  be  dependent  on  the  will 
of  a  single  man,  who  adds  to  or  cuts  from  his  working-force  of 
men,  according  to  the  pointings  of  the  index  on  the  register  of 
his  own  interests,  as  an  engineer  regulates  the  force  of  steam 
by  the  markings  of  the  steam-gauge  of  his  engine. 

If  the  laborer  lose  his  place,  he  may  be  compelled  to  change 
his  residence,  and  to  seek  employment  in  a  distant  locality,  with- 
out the  certainty  of  securing  it,  except  after  such  delay  and 
expense  as  he  is  unable  to  afford. 

In  the  place  of  the  independent  artisan  in  his  own  shop,  the 
proprietor  of  his  own  labor,  we  have  the  dependent  factory- 
hand  or  iron-worker,  a  single  part  of  a  great  and  complex  ma- 
chine whose  place  may  be  supplied  in  an  hour,  should  he  drop  out. 

Says  Mr.  Andrew  Carnegie,  "  We  assemble  thousands  of  oper- 
ators in  the  factory,  in  the  mine,  and  in  the  counting-house,  of 
whom  the  employer  can  know  little  or  nothing,  and  to  whom 
the  employer  is  little  better  than  a  myth.  All  intercourse  be- 
tween them  is  at  an  end.  Under  the  law  of  competition  the 
employer  of  thousands  is  forced  into  the  strictest  economies, 
among  which  the  rate  paid  to  labor  figures  prominently ;  and 
often  there  is  friction  between  the  employer  and  employe,  be- 
tween capital  and  labor,  between  the  rich  and  the  poor.  Human 
society  loses  '  homogeneity.'  " 

By  the  aid  of  machinery,  the  productive  power  of  labor,  in 
many  departments  of  industry,  has  been  multiplied  from  twenty- 
to  a  hundredfold;  and  it  would  be  quite  within  bounds  to  say 
that,  in  this  country,  the  total  power  of  labor  has  been  increased 
tenfold.  In  the  production  of  food  the  increase  is  not  so  great  ; 
but  it  is  two  or  three  times  as  great  as  it  was  fifty  years  ago. 
One-half  the  labor  power  of  the  whole  country  is  sufficient  to 
produce  all  that  the  people  consume,  although  the  present  con- 
sumption of  the  products  of  labor  must  be  more  than  double 
what  it  was  fifty  years  ago. 

Flouring-mills  run  to  their  full  capacity  for  three  months  could 
supply  the  flour  for  a  year's  consumption;  our  cotton-mills, 
woollen-mills,  and  iron-mills,  in  six  months,  could  supply  a  year's 
demand  for  their  products. 


THE  DISTRIBUTION  OF  WEALTH.  29 

In  every  town  or  city  there  may  always  be  found  idle  men 
and  others  who,  though  not  idle,  are  ineffectively  employed; 
and  there  is  always  a  man  ready  for  every  vacant  place.  A 
single  insertion  in  a  metropolitan  newspaper  of  a  two- line  ad- 
vertisement for  a  coachman  or  a  clerk  wanted  is  often  sufficient 
to  secure  the  response  of  a  hundred  needy  applicants. 

What  shall  be  done  with*  all  this  labor  ?  How  sball  be  secured 
equal  opportunities  to  each  man  in  this  pushing,  surging  crowd 
of  workers,  where  each,  per  force  of  necessity,  must  rudely 
jostle  his  neighbor  to  save  himself  from  being  trampled  upon  ? 

If  the  labor  that  is  performed,  even  at  the  prices  that  are  paid, 
could  be  equitably  distributed  among  all,  so  that  each  might 
have  like  command  of  the  products  of  industry,  there  would  be 
no  difficulty  arising  out  of  the  excess  of  labor.  But  what  is  to 
prevent  A  from  working  twelve  months,  while  B  finds  employ- 
ment for  but  six  months  of  the  year  ?  If  B  receives  only  the 
wages  of  six  months,  he  can  consume  only  the  products  of  six 
months'  labor.  When  a  great  number  of  people  are  unemployed 
one-half  or  one-third  of  the  time,  the  demand  for  the  products 
which  they  consume  is  proportionally  reduced. 

The  increase  of  the  product  at  any  time  beyond  the  effective 
demand  rapidly  lowers  prices ;  so  manufacturers,  being  on  guard 
against  over-production,  cut  off  labor  to  reduce  the  product; 
and  since,  by  the  very  act  of  reducing  production,  consumption 
is  reduced,  the  effect  of  this  form  of  competition  often  is  to 
defeat  its  purpose  by  distributing  the  equilibrium  of  the  in- 
dustries. These  effects  are  not  always  quickly  manifested,  for 
the  reason  that  those  who  suffer  enforced  idleness  supply  their 
demands  for  perishable  products  by  drawing  from  their  store 
of  savings,  while  those  who  are  continuously  employed  save  a 
larger  part  of  their  earnings ;  but  the  effect  is  to  continually  in- 
crease the  number  and  dependence  of  the  poor,  and  thereby  to 
narrow  the  market  for  the  products  of  industry. 

An  equitable  division  of  labor  among  all  workers,  and  rela- 
tively equal  wages,  in  conformity  with  the  principles  of  a  sound 
social  economy,  is  one  of  the  conditions  essential  to  universal 
and  continued  prosperity.  Individual  misfortune,  differences  in 
individual  economy,  inequalities  in  the  numbers  who  compose 
the  families  of  laboring  men,  and  the  power  of  capital  in  unjust 


30  THE  DISTEIBUTION   OP  WEALTH. 

measure  to  absorb  the  earnings  of  the  workers,  would,  however, 
still  remain  the  potent  factors  of  inequality. 

An  equitable  distribution  of  labor  among  the  workers  is  neces- 
sary for  the  general  good.  How  is  such  distribution  to  be  se- 
cured ?  Evidently  not  by  artificial  arrangement,  nor  by  the 
direct  application  of  legislative  authority.  The  shutting  down 
of  iron-mills  and  factories  from  time  to  time,  in  order  to  prevent 
over-production,  often  is,  under  present  conditions,  a  business 
necessity,  essential  to  the  welfare  of  both  employer  and  em- 
ploye. But  it  is  a  harsh  and  unsatisfactory  remedy,  attended 
with  great  loss  of  labor,  and  injurious  in  its  effects  upon  other 
industries.  It  is  a  measure  open  to  serious  abuses ;  onl}-  tem- 
porary in  its  results ;  and,  without  combination  among  all  em- 
ployers in  the  same  industry,  which  in  itself  is  a  menace  to  the 
welfare  of  other  industries,  impracticable.  The  only  effective 
and  permanent  remedy  must  be  sought  in  some  measure  or 
policy  that  will  secure  to  the  entire  people  the  opportunity  for 
constant  employment.  Some  relief,  no  doubt,  will  be  found  in 
an  extended  field  for  the  employment  of  labor.  When  the  old- 
time  occupations  of  woman  were  taken  away  she  found  new 
ones.  When  she  put  away  the  spinning-wheel,  the  distaff,  and 
the  loom,  she  found  no  time  for  idle  leisure.  The  training  of 
her  children,  the  decoration  of  her  home,  and  a  variety  of  social 
duties  made  new  requisitions  on  her  time.  When  the  sewing- 
machine  multiplied  the  power  of  the  needle,  she  increased  her 
wardrobe,  and  added  more  elaborate  ornament  to  her  apparel. 

The  demand  for  a  more  universal  education  of  the  people,  it 
is  to  be  hoped,  may,  in  the  near  future,  claim  the  time  of  the 
young,  and  thus,  in  part,  relieve  the  productive  occupations  from 
the  force  of  that  feverish  competition  through  which  first  one 
industry  and  then,  in  turn,  another  is  depressed  by  a  fluctuating 
surplus  that  renders  values  unsteady,  and  thereby  endangers 
capital,  which,  to  guard  against  possible  loss,  demands  a  wider 
margin  of  profit,  and  secures  it  by  reducing  wages  or  by  re- 
stricting production ;  that  turns  trade  into  speculation,  and 
makes  the  earnings  of  labor  the  stake  to  be  raffled  for  by  the 
gamblei-s  on  'change. 

The  nearer  values  can  be  kept  to  a  definite  standard,  and  the 
more  gradual  the  changes,  the  better  always  for  the  people.    In 


THE  DISTRIBUTION  OP  WEALTH.  31 

the  earlier  part  of  the  century,  before  our  present  industrial 
civilization  had  swept  away  the  old  conditions,  each  family  con- 
sumed a  much  larger  share,  than  now,  of  the  product  of  its  own 
labor.  The  houses  in  which  the  people  dwelt  were  the  direct 
product  of  their  own  labor  and  that  of  local  mechanics.  The 
lumber  was  sawed  at  the  neighboring  mill,  out  of  logs  cut  by 
their  own  hands,  and  hauled  by  their  own  teams.  There  were 
then  no  great  yards  stacked  with  sawed  and  dressed  lumber 
shipped  from  distant  localities.  The  flour  consumed  in  each 
community  was  ground  at  the  local  mill,  from  wheat  grown  on 
the  farm  near  by.  The  clothing  of  the  farmer  and  of  the  me- 
chanic was  the  product  of  his  own  household.  The  food  of  the 
farmer  was  supplied  from  his  own  farm,  and  that  of  the  me- 
chanic from  the  neighborhood  in  which  he  dwelt.  Each  com- 
munity was,  in  great  measure,  an  independent  social  and  in- 
dustrial organization  forming  a  complete  circle  for  the  rounds 
of  exchange  ;  and  commerce  did  not  then,  as  now,  sweep  in  one 
unbroken  tide  from  Maine  to  California,  overleaping  mountain 
ranges,  gathering  volume  over  a  wide-extended  sea  of  human 
industry,  and  commingling  on  its  crest  the  products  of  New 
England  and  Illinois ;  it  was  then  as  but  a  wave  on  a  little  in- 
land lake,  which,  ere  it  gathers  force  or  volume,  is  wasted  in 
ripples  on  the  shore  near  by. 

To-day  the  farmer  and  the  mechanic  buys  his  clothing  ready 
made ;  and  the  money  he  gives  in  exchange  is  carried  hundreds 
of  miles  away. 

The  grocery  store  supplies  him  with  flour,  canned  fruits,  and 
cured  meats  brought  from  distant  places,  and  sold  at  varying 
prices,  the  net  result  of  the  manipulations  of  two  or  three  sets 
of  middle-men,  each  seeking  a  profit  out  of  whatever  passes 
through  his  hands.  Then  the  exchange  of  products  was  more 
direct,  and  relatively  much  smaller  in  amount.  To-day  every 
product  of  labor  is  tossed  into  the  whirlpool  of  universal  com- 
merce, and  each  man  is  engaged  in  a  struggle  with  every  other 
man  to  get  more  out  than  he  puts  in. 

Instead  of  sailing  in  small  vessels  over  the  placid  waters  of  a 
quiet  inland  lake,  commerce,  in  heavy-burdened  ships,  ranges 
over  a  storm-swept  sea,  where  only  the  more  experienced  and 
skilful  mariner  can  steer  clear  of  Md^j^k'Xip^^bMLonly  the 

OP  THE 

uhiversitt: 


32  THE   DTSTKIBUTION   OF  WEALTH. 

old  sailor  is  able  to  read  the  portent  of  a  threatening  sky,  and 
reef  his  sails  before  the  oncoming  of  the  angry  storm,  which 
shall  wreck  the  vessel  and  scatter  the  cargo  of  the  inexperienced 
adventurer ;  where  pirates  ply  their  trade  and  rob  the  weak ; 
and  where  greater  fortunes  are  often  gathered  out  of  the  salvage 
of  sunken  cargoes  than  from  the  profits  of  legitimate  commerce. 
We  may  not  wish  for  the  return  of  the  olden  time,  when  priva- 
tion indeed  was  more  general  than  now,  but  the  pinch  of  extreme 
poverty  was  less  severe  and  more  seldom  felt ;  when  there  were 
no  millionaires  and  no  tramps ;  when  there  was  less  of  luxury, 
but  more  general  content ;  but  we  may  invoke  the  return  of  one 
of  the  advantages  then  enjoyed.  The  producer  and  consumer 
were  neighbors  then ;  it  would  be  better  if  they  were  neighbors 
now.  If,  instead  of  a  few  great  manufacturing  centres,  manu- 
factures could  be  so  distributed  as  to  bring  producer  and  con- 
sumer into  the  nearest  possible  proximity,  great  benefit,  both 
material  and  moral,  would  accrue  to  the  people  at  large. 

Capital  is  not  interested  in  leading  to  this  result,  but  the  peo- 
ple are.  Transportation  for  the  sake  of  transportation,  trade 
for  the  sake  of  trade,  may  furnish  to  surplus  capital  opportuni- 
ties for  profit;  but  labor  bears  the  burden. 

The  spirit  of  American  trade  is  best  expressed  in  that  slang 
proverb,  "  Business  is  business."  A  healthy  social  economy  must 
be  founded  on  nobler  sentiments  than  those  which  gave  birth  to 
this  maxim  of  commercial  piracy. 

Commerce  for  the  purpose  of  supplying  the  wants  of  the 
people  is  a  necessity ;  commerce  for  the  purpose  of  supplying 
opportunities  to  middle-men  is  but  an  organized  scheme  to  levy 
tribute.  Under  present  conditions  of  production  and  trade, 
results  like  the  following  are  possible. 

Illinois  is  a  State  rich  in  agriculture,  capable  of  supplying  food 
for  ten  millions  of  people.  Suppose  she  had,  within  her  limits, 
cotton-  and  woollen-mills,  and  skilled  workmen  to  operate  them, 
enough  to  supply  all  the  cotton  and  woollen  fabrics  required  for 
the  consumption  of  the  people  of  the  United  States.  Suppose 
that  these  industries  in  her  midst  had  reached  the  highest  de- 
gree of  perfection,  and  that  like  industries  had  not  yet  been 
established  elsewhere.  Her  manufactures  supply  the  wants  of 
the  whole  people.    We  will  assume,  further,  that  she  is  suppUed 


THE  DISTRIBUTION  OP  WEALTH.  33 

with  other  manufacturing  industries  sufficient  to  meet  the  wants 
of  her  own  people.  Her  cotton  and  woollen  fabrics  are  sold  in 
every  city  and  village  in  the  nation,  bringing  in  a  continual 
flood  of  money.  As  all  her  people  need  for  home  consumption 
is  supplied  at  home,  she  has  no  need  to  buy  beyond  her  own 
limits.  Her  trade  with  the  people  of  other  States  is  an  exchange 
of  cottons  and  woollens  for  money.  The  process  goes  on  till 
other  States  are  drained  of  money.  Then  comes  financial 
pressure.  The  people  who  have  been  buying  more  than  they 
have  been  selling  resort  to  loans.  They  borrow  from  the  capi- 
talists of  Illinois  and  pay  interest.  If  an  attempt  be  made  to 
establish  cotton  and  woollen  industries  in  other  States,  first  capi- 
tal must  be  secured ;  then  skilled  labor  must  be  brought  in,  and 
skilled  labor  is  loath  to  emigrate,  except  on  condition  of  assured 
employment  and  higher  wages.  Small  mills,  burdened  with 
interest  on  capital  and  higher  rates  of  transportation,  and  with- 
out the  advantage  of  an  established  trade,  are  unable  to  com- 
pete with  the  strong  and  skilfully-managed  establishments  of 
Illinois.  A  condition  of  dependence  is  brought  about,  similar  to 
that  which  exists  to-day  between  England  and  Ireland. 

Here  are  two  islands,  separated  only  by  a  channel  of  the  sea, 
each  enjoying  all  the  advantages  of  a  salubrious  climate  and  a 
fertile  soil. .  Their  industries  have  been  developed  under  the 
same  laws,  both  alike  enjoying  the  advantages  of  a  trade  un- 
trammelled by  protective  duties ;  and  yet  England  is  rich  and 
Ireland  is  poor.  The  area  of  England  is  less  than  double  the 
area  of  Ireland;  yet  the  incomes  of  the  English  people  are 
nearly  thirty  times  as  great  as  those  of  the  people  of  Ireland ; 
the  houses  of  England  average,  in  value,  two  and  one-half  times 
the  value  of  the  dwellings  of  Ireland ;  while  the  rental  value  of 
the  lands  of  Ireland,  per  acre,  is  less  than  one-third  the  rental 
value  of  the  lands  of  England.  Why?  England  obtained  an 
earlier  start  in  industrial  progress.  Her  manufacturing  indus- 
tries became  established  and  strong.  Ireland  grew  oats,  and 
cattle  and  hogs,  and  potatoes;  England  made  cloth  and  iron. 
Nature  fixes  no  bounds  to  production  in  manufacturing  indus- 
tries, nor  is  consumption  limited  by  fixed  needs ;  while  the 
product  of  agriculture  is  measured  by  the  capabilities  of  the  soil, 
and  the  number  of  people  is  the  measure  of  the  demand.    A 

8 


34  THE  DISTKIBUTION  OF  WEALTH. 

manufacturing  industry,  in  its  infancy,  in  Ireland,  could  not 
compete  with  capital  and  skill  in  England,  where  every  industry 
had  become  a  part  of  an  associated  group  of  industries,  thus 
securing  the  greatest  possible  economy  of  production  in  each ; 
and  so  the  Irish  kept  on  raising  oats  and  potatoes,  cattle  and 
hogs ;  while  England  gathered  in  the  wealth  of  the  nations,  and 
her  capital  flowed  abroad  in  the  shape  of  loans  and  railway 
bonds,  to  burden  the  industries  of  poorer  nations  with  perpetual 
tribute  to  the  English  people ;  and,  having  exhausted  the  field 
of  most  profitable  investment  elsewhere,  is  now  absorbing  the 
most  profitable  industries  of  the  people  of  the  United  States. 
True,  there  were  other  causes ;  but  they  became  effective,  and 
produced  results  through  the  operation  of  the  leading  cause 
which  I  have  stated. 

In  time,  after  the  people  of  other  States  had  sent  their  money 
to  Illinois,  and  gotten  it  back  in  the  form  of  loans,  they  would 
begin  to  ship  their  products  abroad,  selling  at  whatever  price 
the  market  would  command,  or  shipping  to  Illinois  and  selling 
in  competition  with  the  produce  of  the  farms  of  Illinois,  as  the 
Irish  sell  the  produce  of  their  lands  in  England  in  competition 
with  the  English  farmer,  to  pay  for  what  they  buy  of  the  Eng- 
lish manufacturer.  The  accumulated  capital  of  Illinois  would 
overflow  into  the  other  States  in  the  form  of  loans;  there 
would  be  an  era  of  apparent  prosperity,  followed  by  years  of 
adversity  and  commercial  dependence.  This,  of  course,  is  an 
overdrawn  picture  of  what  even  might  be  in  the  United  States  ; 
but,  in  its  illustration  of  the  operation  of  economic  laws,  under 
certain  conditions,  it  is  a  true  picture.  It  is  essential  to  the 
welfare  of  States,  and  of  communities  even  smaller  than  States, 
that  the  balance  of  trade  be  preserved  with  the  world  at  large. 
The  evil  which  I  have  illustrated  is,  in  a  great  measure,  self- 
corrective,  at  the  expense,  however,  of  permanent  loss  to  in- 
dividuals and  communities.  The  people  of  a  county,  burdened 
with  a  foreign  debt,  may  consume  less  food  and  less  clothing, 
and  live  in  meaner  houses,  and  get  out  of  debt ;  but  when  inter- 
est accumulates  too  rapidly,  mortgages  mature,  and  money  goes 
out  faster  than  it  comes  in,  and  prices  of  real  estate  go  down, 
and  farms  begin  to  fall  into  the  hands  of  the  foreign  creditor,  it 
is  not  only  those  in  debt  who  suffer,  but  the  people  of  the  county, 


THE  DISTRIBUTION  OF   WEALTH.  36 

except  those  who  may  be  able  to  thrive  upon  the  adversity 
of  others.  When  such  conditions  are  not  confined  to  a  county, 
but  spread  over  a  State,  the  evil  is  intensified  and  the  period  of 
adversity  prolonged. 

It  has  been  claimed  that  the  relative  conditions  which  I  have 
described  exist  between  the  New  England  and  the  Western 
States.  It  is  not  the  purpose  here  to  inquire  whether  or  not 
this  claim  is  well  founded ;  what  I  seek  to  show  is,  that  the  way 
is  open  for  such  conditions  to  establish  themselves. 

It  is  to  the  interest  of  every  community,  so  far  as  practicable, 
to  maintain  commercial  and  industrial  independence.  A  policy 
shaped  to  this  end  will  necessarily  be  subordinated  to  those  con- 
trolling conditions  which  will  confine  its  operation  within  some- 
what narrow  limits,  yet  it  is  a  policy  which  should  never  be  lost 
sight  of  nor  abandoned. 

Money  accumulates  in  the  centres  of  manufacturing  and  com- 
mercial industries,  and  goes  out  again  in  the  form  of  loans  on 
agricultural  lands,  until  the  whole  country  is  laid  under  tribute 
to  aggregated  wealth  at  the  great  money-centres.  Every  great 
city  is  the  body  of  an  immense  commercial  octopus,  whose  in- 
numerable arms  reach  out  and  gather  in  the  wealth  of  the 
tributary  area  that  surrounds  and  feeds  it. 

Until  the  prices  of  the  products  of  agriculture  have  felt  the 
effects  of  a  limitation  of  the  agricultural  area,  the  capital  em- 
ployed in  agriculture  in  the  United  States,  except  in  some 
favored  localities,  will  not  bear  the  tax  of  even  a  low  rate  of  in- 
terest, unless,  in  the  mean  while,  the  relations  of  the  industries 
shall  be  somewhat  changed  by  means  of  legislative  modifications 
of  conditions  and  tendencies  that  now  prevail. 

It  is  my  purpose  in  the  following  chapters  to  pursue  the  in- 
quiries suggested  in  this :  First,  to  ascertain  what  are  the  facts 
with  regard  to  the  distribution  of  the  products  of  labor  j  second, 
to  consider  the  economic  forces  that  control  production  and  dis- 
tribution ;  third,  to  ascertain  what  remedies  there  are  that  may 
be  applied  to  the  correction  of  industrial  evils,  if  any  are  found 
to  exist,  which  are  not  the  necessary  outgrowth  of  essential 
economic  conditions. 


36         ^  THE  DISTEIBUTION  OF  WEALTH. 

CHAPTEE  III. 

STATISTICS   OP   PRODUCTION  AND   DISTEIBUTION. 

The  distribution  of  the  products  of  labor  can  be  ascertained 
only  by  consulting  the  facts  disclosed  by  statistics. 

The  census  of  1880  shows  the  number  of  persons  of  each 
occupation,  and  gives  a  carefully-prepared  exhibit  of  all  manu- 
facturing and  mechanical  industries  conducted  in  factory  or 
shop,  embracing  each  establishment  whose  gross  annual  product 
exceeds  five  hundred  dollars  per  annum,  showing  amount  of 
capital  invested  (both  personal  and  real) ;  the  average  number  of 
workers  employed  during  the  year ;  the  total  amount  of  wages 
paid  (including  salaries  of  managers,  etc.)  during  the  year ;  the 
total  cost  of  materials  used,  and  the  total  value  of  all  products. 

The  statistics  of  railways,  telegraphs,  telephones,  steam  navi- 
gation, fisheries,  insurance,  and  mining  are  also  given.  The 
statistics  of  agriculture  disclose  the  number  of  workers,  the 
number  of  acres  and  amount  of  each  crop,  and  the  total  value  of 
the  whole,  as  well  as  the  values  of  farms  and  farm  property. 

The  information  contained  in  the  census  reports,  with  other 
statistics  embraced  in  the  following  chapter,  arranged  and 
analyzed,  enable  us  to  determine  with  a  sufficient  degree  of 
accuracy,  not  only  the  amount  of  the  product,  but  also  the 
manner  of  its  distribution. 

AGRICULTURE. 

The,  statistics  of  agriculture  of  1880  show  the  total  value  of 
the  entire  agricultural  product  for  the  year  1879,  including  that 
which  was 'consumed  on  the  farm,  to  be  $2,212,540,927.  In 
arriving  at  this  estimate,  the  food  of  meat-producing  animals 
was  deducted  from  the  gross  product,  otherwise  this  item  would 
be  twice  counted,  once  in  the  form  of  com  and  hay,  and  once 
in  the  form  of  cattle  and  hogs  sold  or  consumed. 

It  has  been  contended  that  this  amount  is  altogether  too  low. 
Edward  Atkinson  adds  $1,000,000,000  to  cover  amount  con- 
sumed on  the  farm.  I  am  unable  to  find  any  warrant  for  this 
addition  to  the  census  estimate.    The  census  purports  to  give 


THE  DISTRIBUTION  OP  WEALTH.  37 

the  total  value  of  all  products,  including  the  amount  consumed 
on  the  farm  and  the  amount  on  hand.  The  value  of  crops 
appears  to  have  been  estimated  full  high,  and  I  am  unable  to 
perceive  wherein  there  could  have  been  omissions  which,  in 
the  aggregate,  would  greatly  alter  the  census  figures.  Atkin- 
son, however,  quotes  a  letter  from  Mr.  Nimmo,  chief  of  the 
Bureau  of  Statistics,  dated  October  21, 1884,  in  which  Mr.  Nimmo 
says,  "  The  estimate  of  $3,600,000,000  for  the  products  of  agri- 
culture was  given  me  by  Mr.  J.  K.  Dodge  a  year  ago,  as  the 
result  of  careful  investigations,  and  he  firmly  adheres  to  that 
estimate.  .  .  .  The  census  of  1880  gives  62,213,402,564  as  the 
estimated  value  of  farm  productions.  This,  however,  does  not 
include  the  increased  value  of  live-stock,  nor  the  value  of  the 
products  of  pasturage  on  the  public  lands.  It  also  omits,  to  a 
very  large  extent,  the  products  of  horticulture." 

The  increased  value  of  live-stock  was  properly  omitted.  The 
omitted  value  of  horticultural  products  could  not  amount  to  any 
considerable  sum.  The  orchard  and  market-garden  products  are 
included.  The  total  product  of  pasturage  on  the  public  lands 
was  relatively  a  small  sum.  The  ranch  business  employs  but  a 
small  number  of  persons  and  a  large  amount  of  capital.  It 
belongs  to  the  field  of  capital,  rather  than  that  of  agricultural 
labor.  But  adding  all  these  items  claimed  to  have  been  omitted 
would  not  increase  the  census  estimate  ten  per  cent. 

But  an  explanation  of  the  manner  in  which  Mr.  Dodge 
reaches  the  result  so  at  variance  with  the  amount  stated  in  the 
census  reports  is  given  in  a  table  which  he  calls  his  corrected 
estimate  of  the  value  of  farm  products  of  the  year  covered  by 
the  census  returns.     That  table  is  as  follows : 

Table  No.  1. 

THE  PRODUCT   OP  AGRICULTURE   FOR  THE   YEAR    1879. 

Product.                               Quantity.  Value.  Price. 

Meat $800,000,000  .    .    . 

Poultry  and  eggs 180,000,000  .    .    . 

Butter  (pounds) 900,000,000  189,000,000  $0.21 

Cheese        "          300,000,000  28,500,000  .095 

Milk  consumed  (gallons) .    .    .    .1,800,000,000  135,000,000  .075 

$1,332,500,000 


38 


THE  DISTEIBUTION  OF  WEALTH. 


Com 

Wheat 

Oats 

Eye 

Barley 

Buckwheat 


Product.  Quantity. 

(bushels) 1,764,591,676 

"  459,483,137 


407,858,999 
19,837,596 
43,997,495 
11,817,327 


Kice  (pounds) 110,131,373 


Hay  (tons) 

Irish  potatoes  (bushels) 
Sweet  potatoes        " 
Peas  and  beans       " 
Market-garden  products 
Orchard  products  .    .    . 
Hops  (pounds)   .... 


35,150,711 

169,458,539 

33,378,693 

9,590,027 


Cane  sugar  (hhds.)    .    . 
Maple  sugar  (pounds)  . 
Cane  molasses  (gallons) 
Sorghum  syrup      " 
Maple  syl^lp  " 

Honey  (pounds)     .   .    . 


26,546,378 


178,872 
36,576,061 
16,573,273 
28,444,202 
11,796,048 
25,743,208 


Cotton  (pounds) 2,771,797,156 

Wool         "  240,681,761 

Hemp  (tons) 5,025 

Flax  (pounds) 1,555,546 


Tobacco  (pounds) 472,661,157 

Flaxseed  (bushels) 7,170,951 

Grass  seed      **          1,317,701 

Clover  seed    "           1,922,982 


Wines  (gallons)     . 
Beeswax  (pounds) 

Total  value  . 


20,000,000 
1,105,689 


Value. 

$694,818,304 

436,968,463 

146,829,240 

14,992,686 

29,302,332 

7,019,492 

6,607,882 

$1,336,538,399 
$409,505,783 

$81,848,474 
15,020,412 
14,385,041 
21,761,250 
60,876,154 
6,371,131 

$190,262,462 

$16,098,480 
4,754,888 
5,800,646 
9,386,587 
1,796,048 
5,663,506 

$43,500,155 

$271,636,121 

67,390,890 

1,005,000 

391,387 

$340,423,398 

$38,768,215 

$8,963,689 

1,976,552 

11,537,892 

$22,478,133 

12,000,000 
364,877 

$3,726,331,422 


Price. 
$0,396 
.951 
.36 
.756 
.666 
.594 
.06 


$11.65 

$0,483 

.45 

1.50 


.24 


$90.00 
.13 
.35 
.33 
1.00 
.22 


$0,098 
.28 
200.00 
.25 


$0,085 

$1.25 
1.50 
6.00 


$0.60 
.33 


In  the  foregoing  table  the  meat  product  is  estimated  at  more 
than  double  the  value  of  the  meat  product  of  1869,  as  given  in 


THE  DISTRIBUTION  OP  WEALTH.  3» 

the  census  report  of  1870,  when  it  was  reported  as  a  separate 
item.  The  value  of  poultry  and  eggs  is  nearly  double  the 
amount  shown  by  the  census  estimates.  The  butter  product  is 
given  as  93,000,000  pounds  in  excess  of  the  sum  of  farm  and  fac- 
tory product  as  shown  in  census  returns,  and  the  value  is  placed  at 
twenty-one  cents  per  pound,  while  the  export  value,  as  shown  by 
the  report  of  the  Treasury  Department  for  the  second  quarter  of 
the  fiscal  year  of  1879  and  1880,  was  fourteen  and  one-fifth  cents. 
The  price  of  oats  is  six  cents  more  than  the  export  value  during 
the  same  period,  and  the  price  of  cheese  one-half  cent  more  than 
the  export  value.     Many  other  values  are  manifestly  too  high. 

The  estimates  of  the  values  of  crops  made  by  the  Department 
of  Agriculture  are  based  on  the  prices  obtained  for  that  portion 
of  the  product  which  is  sold.  The  unmerchantable  part  of  the 
product  which  is  consumed  on  the  farm  is  for  this  reason  valued 
too  high.  The  estimates  are  made,  as  a  rule,  after  prices  have 
somewhat  advanced  beyond  those  obtained  for  the  product 
which  is  sold  early. 

The  average  price  is  arrived  at  by  averaging  different  locali- 
ties in  a  State,  and  then  by  averaging  the  States.  The  result 
does  not  show  the  average  price  realized  by  the  farmer.  Where 
the  prices  of  corn  and  oats  are  highest,  there  the  largest  pro- 
portion is  consumed  on  the  farm.  Much  of  the  corn  sold  is 
purchased  and  consumed  by  farmers  elsewhere ;  shipments  are 
made  from  where  prices  are  low  to  where  prices,  owing  to  short 
crops,  are  high,  thus  adding  cost  of  freight  and  commissions  to 
a  considerable  part  of  that  which  is  consumed  on  farms,  in  feed- 
ing meat-producing  animals  and  work-animals.  I  have,  in  the 
following  table,  put  wheat  five  cents,  corn  3.6  cents,  and  oats 
four  cents  lower  than  the  Agricultural  Department  estimates, 
but  have  valued  the  amount  consumed  on  the  farm  at  the  average 
price  of  the  entire  product,  whereas  it  is  in  fact  considerable 
more.  The  per  cent,  of  corn  shipped  from  the  county  is,  in  the 
Western  States,  24.7 ;  in  New  England,  2.4 ;  in  Middle  States,  10.8. 

Of  the  total  product  of  $2,212,540,927  for  the  whole  United 
States  for  the  year  1879,  as  exhibited  by  the  census  of  1880,  the 
sum  of  $203,980,137,  or  $467.45  per  capita  for  each  agricultural 
worker,  is  credited  to  the  State  of  Illinois.*      Keports  of  the 

*  Eeport  of  Department  of  Agriculture  for  1883. 


40  THE  DISTRIBUTION  OP  WEALTH. 

Department  of  Agriculture  of  that  State  give  the  farm  prices  of 
agricultural  products  for  that  year  of  every  product  of  impor- 
tance. The  quantity  of  product  returned  in  the  census  is  so 
much  greater  than  that  shown  by  the  agricultural  reports  of 
the  State,  based  upon  assessors'  returns,  as  to  leave  little  room 
for  doubt  that  the  quantities  shown  by  the  census  returns  fully 
cover,  if  they  do  not  exceed,  the  amount  of  the  actual  product. 

Statistics  of  farm  crops  furnished  by  assessors  are  always  in- 
complete, and  the  crop  is  always  in  excess  of  the  amount  shown 
by  assessors'  returns.  The  reason  for  this  is  not,  as  commonly 
asserted,  a  disposition  among  farmers  to  underestimate  their 
crops  and  withhold  information, — a  disposition  sometimes  mani- 
fested by  the  most  ignorant, — but  the  negligent  manner  in  which 
the  work  of  obtaining  these  statistics  is  attended  to  by  assessors, 
whose  principal  duty  does  not  relate  to  the  collection  of  statis- 
tics of  farm  crops,  and  who  are  often  indifferent  as  to  the  man- 
ner in  which  this  incidental  service  is  performed.  The  statistics 
of  the  census  were  obtained  by  persons  specially  charged  with 
that  work,  which  was  carefully  and  conscientiously  performed. 
Inaccuracies  in  reports  given  by  farmers  would  naturally  occur 
more  frequently  in  over-estimates  than  under-estimates  of  the 
amount  of  crops  grown. 

In  the  following  table  of  the  agricultural  products  of  the 
State  of  Illinois  for  the  census  year,  the  quantities  given  are 
taken  from  the  census  of  1880,  while  the  prices  of  the  cereals 
and  of  hay  and  potatoes  are  taken  from  the  agricultural  report 
of  the  State.    Prices  of  other  commodities  are  estimated. 

Table  No.  2. 

PRODUCTS   OF  AGRICULTURE    OF    THE    STATE   OF    ILLINOIS    FOR    THE 

YEAR   1879. 

Product.                                        Quantity.            Price.  Value. 

Meat  product $46,000,000 

Poultry  sold  or  consumed ...  3,000,000 

Butter  made  on  farms  (pounds)   .    .    .    53,657,943          $0.15  8,053,690 

Cheese  made  on  farms       »           ...      1,003,069              .09  92,976 

Milk  consumed  on  farms ...  3,000,000 

Milk  sold  (gallons) 45,419,719              .07  3,179,380 

produced  (dozens) 35,978,297             .15  5,396,745 

$68,722,791 


THE  DISTRIBUTION  OP  WEALTH. 


41 


Product.  Quantity. 

Com       (bushels) 825,792,481 


Wheat 

Oats 

Rye 

Barley 
Buckwheat 


61,110,502 

68,189,200 

8,121,785 

1,229,623 

178,869 


Hay  (tons) 2,678,736 

Irish  potatoes  (bushels) 10,366,307 


Sweet  potatoes      " 
Peas  and  beans      " 
Market-garden  products 
Orchard  products  .    .    . 
Hops  (pounds)  .... 


249,407 
69,248 


7,778 


Maple  sugar  (pounds) 80,193 

Maple  syrup  (gallons) 40,077 

Sorghum  syrup   "           2,265,993 

Honey  (pounds) 1,310,806 


Price. 

$0.32 
.87 
.22 
.47 
.46 
.60 


16.37 

.60 

.60 

150 


.24 


10.13 

1.00 

.33 

.20 


Value. 

$104,268,694 

44,166,136 

13,901,624 

1,467,239 

665,680 

117,316 

$164,471,688 

$15,717,713 

5,182,653 

124,703 

103,872 

959,962 

3,502,683 

1,859 

$26,593,345 

$10,425 

40,077 

766,331 

262,160 

$1,067,993 


Cotton  (pounds) 
Wool  " 

Hemp  (tons)  .    . 
Plax  (tons  fibre) 


8,928 
6,093,066 

61 


Tobacco  (pounds) 3,935,825 

Flaxseed  (bushels) 1,812,438 

Grass  seed       '*  213,329 

Clover  seed    "  138,191 


Wines  (gallons) 326,323 

Beeswax  (pounds) 46,640 

Broom  com    "  11,646,100 

Wood  cut  (cords)      1,763,334 

Lumber 

Hungarian  seed  (bushels)  ....  43,776 


$0.09 

.28 

2.00 

6.00 


$0.08 
1.00 
1.50 
5.00 


$0.50 

.33 

.05 

2.00 

.50 


$803 

1,706,057 

450 

30,500 

$1,737,810 

$314,866 

1,812,438 

319,993 

690,965 

$3,138,252 

$163,160 

-      16,200 

682,255 

3,626,668 

3,952,800 

21,888 

$8,261,971 


42  THE  DISTEIBUTION   OF  WEALTH. 

Product.  Quantity.  Value. 

Horses  sold $2,800,000 

Castor  beans  (bushels) 24,344  80,000 

1)2,830,000 

Total  gross  agricultural  product $275,823,750 

On  the  20th  of  December,  1879,  the  price  of  wheat  was  much 
higher  than  at  the  date  taken  for  the  estimate  above  given ; 
the  price  of  corn  had  not  advanced ;  the  prices  of  cattle  and 
swine  had  declined ;  while  the  prices  of  hay,  oats,  rye,  barley, 
and  buckwheat  had  advanced. 

From  the  gross  product  must  be  deducted  the  value  of  the 
food  consumed  by  work  and  meat-producing  animals,  and  the 
seeds  required  for  the  next  year.  Of  the  hay  grown  probably 
eighty-five  per  cent,  was  fed  on  the  farm.  The  corn  consumed 
on  the  farm  was,  according  to  the  estimate  of  the  Department 
of  Agriculture  of  1883,  sixty-eight  per  cent.  Probably,  sixty  per 
cent,  of  the  oat  crop  was  consumed  on  the  farm. 

The  amount  required  for  seed  is  readily  ascertained  from  the 
acreage  of  crops  as  shown  by  the  census  report  of  1880  Basing 
our  estimate  on  these  ratios,  we  reach  the  following  result : 

Value  of  hay  consumed  on  the  farm $12,360,056 

"       "  com        «          H     u      u        66,722,242 

"       "  oats        "          u     u      u        6,340,974 

Cereals,  grass  seed,  and  potatoes,  etc.,  required  for 

seed  next  year 6,730,800 

Total $91,154,072 

Leaving   a   net    product  of   $184,669,678,— a    sum   which    is 
$19,310,459  less  than  the  census  estimate. 

The  report  of  the  Illinois  Department  of  Agriculture  for  the 
year  1880  shows : 

Value. 

Sheep  sold  in  1879 191,398  $613,156 

Cattle  "     "     " 409,982        16,751,450 

Swine  »      "     " 1,984,294        16,640,061 

Total $34,004,667 

Average  weight  of  hogs  sold,  210  pounds,  and  average  price 
$3.99  per  hundred,  net. 

But  little  beef  or  mutton  was  consumed  on  the  farm. 


THE  DISTEIBUTION  OF  WEALTH.  43 

The  total  population  of  the  State  was  3,077,871,  forty-four  per 
cent,  of  which,  or  1,354,153,  wore  engaged  in  agriculture,  the 
number  of  agricultural  workers  being  436,371. 

Mulhall's  estimate  of  the  consumption  of  meat  in  the  United 
States  is  one  hundred  and  twenty  pounds  per  capita  per  annum. 
One  hundred  and  twenty-five  pounds  of  pork  per  capita  to  the 
agricultural  population  of  the  State  would,  at  the  prices  at 
which  that  product  was  sold,  amount  to  $6,670,765,  which  is 
probably  sufficient  to  cover  farm  consumption  of  pork,  beef, 
and  mutton.  This  amount,  added  to  the  total  above,  gives  a 
total  meat  product  of  $40,675,442.  To  cover  omissions  in  the 
foregoing  table  I  have  put  the  meat  product  at  $46,000,000. 

In  1880  the  total  number  of  cattle  in  Illinois,  as  shown  by  the 
census,  was  2,384,322.  Of  these,  865,913  were  milch  cows.  The 
total  number  of  cattle  slaughtered  or  sold  for  slaughter  in  the 
State  in  1879  probably  reached  600,000 ;  but  those  not  embraced 
in  agricultural  reports,  used  in  the  home  markets  principally, 
and  slaughtered  on  the  farm,  would  not  average  a  value  of  over 
thirty  dollars  per  head. 

The  number  of  hogs  in  Illinois  on  June  1, 1880,  was  5,170,266 ; 
the  number  in  1879  was  less.  The  number  reported  as  dying 
with  disease  in  1879  was  182,877.  This  number,  added  to  the 
number  reported  as  marketed,  would  make  2,167,171.  Making 
allowance  for  the  number  kept  over  to  the  next  year,  and  for 
the  light  weights  and  inferior  quality  of  many  slaughtered  on 
the  farm,  it  will  be  seen  that  the  meat  product  cannot  vary 
greatly  from  the  estimate  adopted  in  the  foregoing  table. 

The  proportion  of  corn  shipped  from  the  county  in  the  "West- 
ern State  is  given  in  the  census  report  as  24.7  per  cent.  The 
amount  shipped  from  the  county  in  Illinois  in  1882  is  given  by 
the  Department  of  Agriculture  as  thirty-two  per  cent. 

The  cost  to  the  farmers  of  Illinois  for  the  year  1879,  of  agri- , 
cultural  implements,  machinery,  wagons,  windmills,  bagging, 
twine,  tools,  fencing  wire,  and  salt,  and  the  cost  of  commercial 
fertilizers,  blacksmithing,  and  the  annual  outlay  in  maintaining 
barns  and  other  out-buildings,  was  not  less  than  $30,000,000. 
Subtracting  this  sum  from  the  product  already  ascertained,  we 
have  a  final  net  product  to  the  farmers  of  Illinois  of  $154,669,718, 
or  $49,310,419  less  than  the  net  product  exhibited  by  the  census. 


44  THE  DISTEIBUnON  OF  WEALTH. 

This  gives  a  per  capita  product  to  each  agricultural  worker  of 
$354.45.  Allowing  one-third  of  this  amount  for  rents  or  profits 
on  capital,  we  have  $236.30  to  each  worker,  and  $51,556,572, 
or  five  per  cent,  on  the  value  of  lands,  farming  utensils,  and 
live-stock  (the  value  of  farm  dwellings  not  being  included),  to 
the  credit  of  rent  or  profit  on  capital  invested.  However,  in 
the  census  estimates  no  deduction  was  made  for  expenditures. 
Food  for  cattle  was  deducted,  but  food  for  work-animals  does 
not  appear  to  have  been  deducted  from  the  gross  amount. 

The  estimates  made  of  the  products  of  Illinois  are  no  doubt  a 
fair  standard  of  comparison  by  which  to  judge  the  estimates  of 
the  products  of  other  States.  Tested  by  this  standard,  the 
estimated  total  product  for  the  United  States  is  too  high. 

The  total  value  of  sheep,  cattle,  and  swine,  slaughtered  at 
slaughtering  establishments  in  the  United  States  in  1879,  was 
$256,738,906.  To  obtain  farm  values,  freights  and  commissions 
must  be  deducted  from  this  sum.  The  total  value,  in  the 
hands  of  farmers,  did  not  exceed  $210,000,000.  This  amount 
does  not  include  animals  slaughtered  by  retail  butchers.  In 
the  following  table  I  have  estimated  the  total  product  at 
$470,000,000.  This  may  be  an  under-estimate ;  but  I  am  unable 
to  find  any  warrant  for  an  estimate  of  over  $500,000,000.  I  have 
adopted  the  value  given  by  Mr.  Dodge  as  to  most  products, 
many  of  which  are  too  high. 

Table  No.  3. 
products  of  agriculture,  1879. 

Product.  Quantity.  Value.  Price. 

Meat $470,000,000 

Poultry  and  eggs :  census, 

456,910,916  dozen 95,000,000 

Butter     made    on     farm 

(pounds) 800,000,000        120,000,000   $0.15  per  pound. 

Cheese     made     on    farm 

(pounds) 30,000,000  2,700,000       .09    "       « 

Milk  consumed,  sold  (gal- 
lons)          530,129,755         37,109,002      .07    "   gallon. 

Milk   consumed  on  farm 

(gallons) 600,000,000  35,000,000      .07    "        " 

$759,809,002 


THE  DISTRIBUTION  OF  WEALTH. 


45 


Product. 
Com  (bushels)  .  ,  . 
Wheat  "  .... 
Oats  "  .... 
Rye  "  .  .  .  . 
Barley  "  .  .  .  . 
Buckwheat  (bushels) . 
Rice  (pounds)  .... 


Quantity. 

1,764,691,676 

469,488,187 

407,858,999 

19,837,696 

43,977,496 

11,817,327 

110,131,378 


Value. 

$649,199,918 

413,367,679 

130,614,869 

11,898,967 

26,386,497 

7,019,492 

6,607,882 


Price. 
$0.36  per  bushel. 
.90  ' 
.82  ' 
.60  ' 
.60  ' 
.69.4 
.06 


pound. 


Hay  (tons) 

Irish  potatoes  (bushels) 
Sweet  potatoes       " 


Beans  " 

Market-garden  products 
Orchard  products    .    . 
Hops  (pounds)     .    .    . 


Cane  sugar  (hogsheads) 
Maple  sugar  (pounds) 
Cane  molasses  (gallons) 
Sorghum  syrup     " 
Maple  syrup  " 

Honey  (pounds)  .    .    . 


Cotton  (pounds)  . 
Wool  " 

Hemp  (tons)    .    . 
Flax  (pounds)  .    . 


Tobacco  (pounds) 

Flaxseed  (bushels) 
Grass  seed       " 
Clover  seed     " 


Wines  (gallons)  .    . 
Beeswax  (pounds)  . 

Total  .   .   .   . 


$1,244,984,284 
35,150,711      $361,607,110 


169,468,639 

33,378,693 

6,614,977 

8,076,050 


26,546,378 


178,872 
36,576,061 
16,573,273 
28,444,202 
11,796,048 
25,743,208 


$81,848,474 

15,020,412 

3,600,000 

4,612,575 

21,761,250 

60,876,154 

6,709,275 

$183,328,140 


$10.00  per  ton. 

$0.48.3  per  bushel. 
.46        "      " 


1.50 


.20       "  pound. 


$16,098,480    $90.00  per  hogsh'd. 
4,754,888  .13    "   pound. 

.35   "  gallon. 


5,800,646 
9,386,507 
1,796,048 
5,663,506 

$43,600,075 


1.00 
.22 


pound. 


2,771,797,156      $271,636,121       $0,098  per  pound. 


240,681,761 
5,026 


472,661,157 


67,390,890  .28 

1,005,000    200.00 

391,387  .25 


ton. 
pound. 


$340,423,398 
$36,624,357 


7,170,951         $8,963,689 
1,317,701  1,976,562 

1,922,982         11,537,892 

$22,478,133 


$1.25  per  bushel. 
1.50    "       " 
6.00    "       " 


20,000,000 
1,105,689 


$12,000,000 
364,877 

$2,995,019,376 


46  THE   DISTRIBUTION  OF  WEALTH. 

Brought  forward $2,995,019,376 

Add  to  cover  sales  of  horses  for  use  of 

others  than  farmers 100,000,000 

Total $3,095,019,376 

From  the  above  table  sbould  be  deducted  ; 

Value  of  seeds  required  for  next  year $87,700,000 

Grain  and  hay  fed  to  stock 880,000,000 

$967,700,000 
Net  agricultural  product $2,127,319,376 

If  we  accept  the  figures  of  Mr.  Dodge,  we  must  deduct  for  seed 
and  feed  for  stock,  $1,049,600,000,  leaving  a  net  product  of 
$2,676,731,422.  To  this  sum  should  be  added  value  of  horses 
and  mules  sold,  to  be  used  for  other  than  agricultural  purposes, 
which,  I  think,  I  have  estimated  full  high.  The  net  result 
would  then  be,  according  to  Dodge,  $2,776,731,422. 

In  the  census  of  1880  the  amount  of  cheese  made  on  farms  is 
given  as  27,272,489  pounds ;  cheese  made  in  factories  as 
215,885,361  pounds.  Mr.  Dodge  gives  the  total  cheese  produc- 
tion as  300,000,000  pounds,  and  then  adds  an  estimate  of 
1,800,000,000  gallons  of  milk  consumed.  The  amount  reported 
in  the  census,  as  sold  to  factories  and  others,  is  530,129,755 
pounds.  The  product  given  by  Dodge  would  require  the  milk 
of  about  16,000,000  cows.  The  number  reported  in  the  census 
is  12,443,120.  He  also  embraces  in  his  estimate  about  4,000,000 
bushels  of  cow-peas  at  $1.50  per  bushel. 

The  total  value  of  agricultural  implements  manufactured  in 
1880  is  given  in  the  census  table  of  manufactures  as 
$63,640,486 ;  that  of  carriages  and  wagons,  $64,951,615.  The 
manufacturers'  value  of  wagons,  wheelbarrows,  windmills,  bag- 
ging, twine,  tools,  and  salt  sold  annually  to  farmers  and  con- 
sumed in  the  process  of  agriculture  is  not  less  than  $50,000,000. 
This  would  make  the  total  amount  of  manufactured  products 
annually  consumed  in  agriculture  $104,951,615.  To  this  must 
be  added  cost  of  transportation  and  commissions  and  profits  of 
middle-men,  at  least  thirty  per  cent.,  making  $136,437,099.  The 
cost  of  commercial  fertilizers  used  was  $28,586,397.  The  cost 
of  fencing  purchased  of  manufacturers,  the  cost  of  blacksmith- 


\ 


THE  DISTRIBUTION  OF  WEALTH.  47 

ing,  and  the  annual  waste  of  capital  invested  in  barns  and  other 
out-buildings  (not  counting  the  labor  of  the  agricultural  classes 
expended  in  building  and  repairs)  was  at  least  $50,000,000. 
The  total  amount  of  the  expenses  of  agriculture  in  money  paid 
to  persons  engaged  in  other  industries,  as  here  estimated,  was 
$215,023,496.  This  leaves  a  net  product  of  81,912,296,880,  or, 
if  we  accept  the  figures  of  Mr.  Dodge,  $2,461,607,926. 

The  forest  product,  consisting  of  wood  and  timber  cut  from 
farm  lands,  reported  in  table  of  product  of  agriculture,  is  not 
embraced  in  the  above  estimates.  The  amount  is  $95,774,735. 
A  great  part  of  this  product  probably  represents  the  labor  of 
pei*sons  returned  in  the  census  as  laborers,  and  classed  under 
the  head  of  personal  service. 

The  advantage  of  wood  and  fuel  on  the  farm,  not  embraced  in 
the  amount  returned  as  forest  product,  and  the  advantage  of 
food  without  the  intervention  of  railway  transportation  or  mid- 
dle-men, may  be  put  down  as  equivalent  to  $50,000,000.  Adding 
this  sum,  and  the  amount  of  the  forest  product  stated,  we  obtain 
as  the  net  value  of  the  agricultural  product  $2,058,071,705. 
There  are  some  products,  the  aggregate  value  of  which  is  not 
counted,  and  some  expenses — among  others  the  cost  of  imported 
breeding  animals — which  are  not  included.  But  if  we  accept 
the  figures  of  the  census,  $2,212,540,927,  as  the  we^  product  of  agri- 
culture for  the  year  1879,  this  sum  is  large  enough  to  cover  all  pos- 
sible omissions  and  under-estimates.  I  will,  therefore,  adopt  that 
sum  as  the  basis  of  subsequent  estimates,  although  the  amount 
is  certainly  too  large,  if  treated  as  the  net  product.^ 

The  number  of  laborers  returned  as  engaged  in  agriculture  is 
7,670,497;  omitting  females  and  males  under  fifteen  years  of 
age,  the  number  is  6,491.116.  The  total  number  of  pei-sons  en- 
gaged in  all  occupations,  not  including  females  or  males  under 

*  Comparing  the  prices  of  agricultural  products  of  the  census  year  with 
those  of  1889,  it  will  be  seen  that  the  values  of  agriculture  have  suffered 
great  reduction.  The  average  price  of  wheat  has  gone  down  from  ninety  cents 
to  seventy  cents  per  bushel ;  the  average  price  of  com  from  thirty-six  cents 
to  twenty-seven  cents  per  bushel ;  the  average  price  of  oats  from  thirty-two 
cents  to  22.6  cents  per  bushel ;  and  there  has  been  a  corresponding  reduction 
in  the  prices  of  hay  and  other  products.  The  drouth  of  the  present  seaaon 
will,  however,  reduce  the  product  and  advance  prices. 


48  THE  DISTRIBUTION  OF   WEALTH. 

fifteen,  is  13,919,752.  Of  those  persons  classed  as  laborers  under 
the  head  of  personal  service,  a  large  number  were  employed,  at 
least  during  part  of  the  year,  in  some  department  of  agriculture. 
"We  may,  therefore,  assume  that  the  total  population  supported 
by  agriculture  was  25,000,000.  This  is  Edward  Atkinson's 
estimate,  and  it  cannot  vary  far  from  the  true  number.  This 
gives  a  per  capita  product  of  $88.50,  or,  $288.45  per  capita  for 
each  person  employed. 

MANUPACTUEES   AND   MINING. 

I  shall  now  endeavor  to  ascertain  the  value  of  the  products 
of  other  industries. 

Mr.  Atkinson  estimates  the  total  value  of  the  products  of  all 
industries  at  $10,000,000,000 ;  and  he  gives  the  following  table, 
furnished  by  Joseph  Nimmo,  chief  of  Census  Bureau  : 

Agriculture $3,600,000,000 

Manufactures 5,369,579,191 

Illuminating  gas 30,000,000 

Mining 236,275,408 

Forestry  (partly  estimated) 455,000,000 

Fisheries     .    .    .   .  • 43,046,058 

Meat  production  and  wool  clip  of  ranches  (est.)  .  40,000,000 

Petroleum  (manufactured  product) 44,000,000 

.  Total  (materials  out) $9,817,900,000 

Eegarding  the  estimate  of  the  product  of  manufactures,  he 
quotes  Mr.  Nimmo,  who  says,  "  I  conferred  fully  with  acting 
superintendent  of  the  census,  Mr.  (xeo.  W.  Eichards,  an  exceed- 
ingly intelligent  and  able  man,  who  appears  to  have  a  thorough 
understanding  of  the  whole  census  figures.  Eegarding  the  total 
value  of  the  products  of  manufacture,  he  stated  to  me  that, 
while  there  were  some  duplications  in  it,  the  omissions  amount 
to  very  much  more.  It.  is  certain  that  the  values  are,  on  the 
average,  below  the  actual  values,  and  that  there  is  a  consider- 
able amount  overlooked ;  besides,  the  census  did  not  take  into 
account  the  products  of  any  establishment  the  value  of  whose 
products  was  less  than  five  hundred  dollars." 

How  far  this  statement  is  aside  from  the  truth  in  regard  to 


THE  DISTRIBUTION  OF  WEALTH.  49 

the  product  of  agriculture  we  have  already  seen.  Now,  as  to 
manufactures.  The  total  gross  product  of  all  manufactures,  as 
shown  by  the  census,  was  $5,369,579,191,  the  amount  given  in 
the  statement  of  Mr.  Nimmo  as  the  net  product.  The  total  value 
of  materials  was  $3,396,823,549  ;  leaving  a  net  or  actual  product 
of  $1,972,755,642,  a  little  more  than  one-third  of  the  amount 
given  by  Mr.  Nimmo  and  adopted  by  Mr.  Atkinson.  The  ma- 
terials consisted  principally  of  manufactured  products,  which 
appear  in  the  statement  of  gross  products.  For  instance,  the 
iron  and  steel  product  is  $296,557,685.  The  iron  and  steel  prod- 
uct is  not  an  ultimate  product,  but  enters  into  the  manufacture 
of  nails,  forgings,  castings,  etc. ;  leather  appears  under  seven 
different  heads,  and  then  again  in  boots  and  shoes  and  belting. 
Under  the  head  of  boots  and  shoes  it  appears  at  different  stages 
of  progress  towards  the  ultimate  product. 

In  vol.  ii.,  "  Census  of  the  United  States,"  1880,  page  2,  notes 
on  "  statistics  of  manufactures,"  appears  the  following  statement  : 
"  It  is  also  evident  that  in  estimating  the  contributions  made  by 
the  manufacturing  industries,  as  a  whole,  to  the  annual  revenue 
of  the  country  a  similar  deduction  should  be  made.  Thus,  while 
the  aggregate  value  of  the  manufactures  of  the  United  States  is 
reported  at  $5,369,579,191,  the  value  of  the  materials  consumed 
therein  is  given  at  not  less  than  $3,396,823,549.  It  is  the  differ- 
ence hetioeen  these  two  sums,  $1,972,755,642,  which  measures  the 
net  product  of  our  manufacturing  industries.  This  deduction 
would  be  required  to  be  made  were  all  the  materials  of 
manufacture  drawn  in  every  case  directly  from  agriculture; 
but,  as  a  matter  of  fact,  the  product  of  one  industry  often 
becomes  the  materials  of  another,  and  the  products  of  this  per- 
haps, in  turn,  the  materials  of  a  third  industry;  and  so  the 
values  of  manufactured  products  are  swollen  by  the  repeated 
inclusion  of  the  same  original  subject-matter.  Thus,  certain 
amounts  of  coal,  iron-ore,  limestone,  and  labor — not  to  speak  of 
other  elements — enter  into  and  make  up  the  value  of  pig-iron. 
All  the  latter  may,  a  few  months  later,  become  the  material  of 
the  manufacture  of  a  certain  quantity  of  bar-iron,  the  reported 
value  of  which,  of  course,  includes  the  value  of  the  pig-iron  as 
well  as  the  labor  and  other  elements  in  the  production  of  the 
bar.     The   bar-iron   may  again   become   the   material  for  the 

4 


50  THE   DISTRIBUTION   OF   WEALTH. 

manufacture  of  a  certain  body  of  machinery,  the  value  of  the 
latter  including  the  value  of  the  bar-iron,  as  well  as  the  labor 
and  other  elements  in  its  own  production.  In  this  way  the 
value  of  the  coal,  iron-ore,  and  limestone  reappears  again  and 
again  through  successive  processes  of  manufacture.  And  this 
is  statistically  right.  Only  in  this  way  can  the  facts  of  each 
industry  by  turns  be  exhibited.  To  omit  these  elements  at  any 
stage  of  production  would  be  to  misstate  the  facts  of  the  par- 
ticular industry  concerned.  But  it  is  evident  that  this  statis- 
tical condition  renders  it  imperative  not  to  consider  the  aggre- 
gated values  of  all  products  of  manufacture  as  an  addition  to 
the  wealth  of  the  country,  but,  on  the  contrary,  in  all  compari- 
sons of  the  nature  referred  to,  the  value  of  materials  should  be 
uniformly  deducted." 

Edward  Atkinson  ("  Distribution  of  Products,"  page  129)  says 
that  he  reached  the  conclusion  that  the  annual  product  of  all 
industries  in  the  United  States  was  $10,000,000,000  in  the  fol- 
lowing remarkable  manner :  "  First,  by  converting  that  por- 
tion of  the  wheat  crop  which  is  consumed  in  the  United  States 
into  bread,  and  a  large  portion  of  the  corn  into  meal  for  final 
consumption ;  and  to  this  secondary  or  final  form  I  applied  the 
average  retail  prices.  I  also  ascertained,  as  nearly  as  possible, 
the  ultimate  value  of  dairy  products  and  the  like.  Second,  I 
converted  the  known  quantity  of  textile  fibres  consumed  within 
the  United  States  into  fabrics,  and  I  then  estimated  these 
fabrics  at  their  value  in  finished  clothing  at  the  average  prices 
which  are  charged  by  shopkeepers.  Third,  I  converted  the 
known  production  of  metals  into  machinery  and  other  forms 
ready  for  final  use,  and  valued  them.  Fourth,  I  valued  the 
timber  product  as  furniture,  dwelling-houses,  and  the  like. 
Fifth,  I  converted  the  sum  of  our  imports  into  a  value  at  its 
final  point  of  consumption,  by  estimating  the  cost  of  distribu- 
tion, and  by  other  similar  methods. 

"  Of  course,  this  method  is  one  which  could  not  be  made 
absolutely  correct,  especially  by  a  private  person  working  only 
in  the  intervals  of  active  business." 

Had  Mr.  Atkinson  furnished  an  inventory  of  products  show- 
ing the  result  of  his  labors  in  the  imaginary  role  of  farmer, 
miller,  baker  and  butcher,  spinner,  weaver  and  tailor,  black- 


THE  DISTRIBUTION   OF  WEALTH.  61 

smith,  carpenter  and  cabinet-maker,  with  a  schedule  of  retail 
prices  attached,  it  might  have  added  to  the  interest  and  humor 
of  the  explanation.  We  would  have  then  been  advised  how 
much  of  the  iron  he  converted  into  watch-springs,  and  how 
much  into  stoves;  how  much  into  pins,  and  how  much  into 
pokers ;  how  much  of  the  timber  was  converted  into  joists  and 
beams,  and  how  much  into  matches  and  tooth  picks ;  how  much 
into  pianos  and  fiddles,  and  how  much  into  wheelbarrows  and 
log  wagons.  It  is  not  to  be  wondered  at,  that  when  Mr. 
Atkinson  found  that  Mr.  Nimmo's  statistics  brought  a  result 
corresponding  to  that  which  he  had  reached  by  a  method  of 
calculation  so  intricate  and  laborious,  he  was  not  in  a  mood  to 
question  Mr.  Nimmo's  figures.  Mr.  Atkinson  and  Mr.  Kimmo 
having  verified  each  other,  their  statements  have  been  accepted 
as  authoritative. 

The  following  table  gives  the  value  of  the  products  of  the 
different  industries  as  shown  by  the  census  report  of  1880 : 

Table  No.  4. 

Industries.  Products. 

Agriculture $2,212,540,927 

Manufactures 1,972,755,642 

Coal 94,558,608 

Salt 4,762,493 

Petroleum 24,000,000 

Iron-ore   .^ 23,156,957 

Copper-ore 9,458,434 

Lead 7,935,140 

Zinc 4,240,006 

Minor  metals 3,387,444 

Quarry  products 18,000,000 

Fish  product 43,046,053 

.  Gold  and  silver 203,141,764 

Boat-building  and  repairing  (including  ships)    .  17,063,969 
Lumber  in  logs  not  included   in    agricultural 

product     . 100,000,000 

New    railroads    in    1879,    4746  miles,    grading 

$5000  per  mile 23,730,000 

Kailway  and  water  transportation  of  freight    .    .  500,000,000 

Total $5,261,777,437 

Total  (agriculture  omitted)     ....  $3,049,236,510 


52  THE  DISTRIBUTION   OF   WEALTH. 

The  item  of  "  lumber  in  logs"  is  an  estimate,  but  is  approxi- 
mately connect.  I  have  estimated  the  cost  of  grading  new 
railroads  at  $5000  per  mile,  which  amount,  considering  the 
location  of  the  roads,  will  fully  cover  the  cost.  The  cost  of  iron 
and  steel  is  embraced  in  "  products  of  manufacture,"  and  of 
ties  and  timbers  in  forest  products  of  agriculture,  or  "  products 
of  manufacture." 

My  statement  of  the  amount  of  the  petroleum  product  does 
not  agree  with  that  of  Mr.  Nimmo  quoted  above,  for  the  reason 
that,  in  the  figures  given  by  him  are  embraced  $13,000,000 
worth  of  barrels  and  tin  cans,  and  $1,200,000  worth  of  sulphuric 
acid,  as  well  as  other  items  which  do  not  belong  under  that 
head. 

INDUSTRIES   NOT  EMBRACED   IN   CENSUS   REPORTS. 

The  employment  tables  of  the  census  do  not  purport  to  em- 
brace the  product  of  the  labor  of  retail  butchers,  tailors,  dress- 
makers or  milliners,  nor  of  establishments  yielding  a  gross 
annual  product  of  less  than  five  hundred  dollars.  Only  the 
average  number  of  employes  is  given;  and  the  total  number 
of  persons  employed  is  considerably  larger.  If  we  deduct  from 
the  number  of  persons  set  down  in  the  occupation  tables  to  each 
industry  the  number  of  those  whose  labor  is  embraced  in  the 
employment  tables,  the  remainder  will  represent  the  number  of 
those  whose  labor  product  is  not  included  in  the  value  of 
products  already  given.  A  large  number  of  carpenters  are 
in  the  employ  of  railway  companies;  and  allowance  must 
also  be  made  for  laborers  employed  in  railway  construction, 
the  value  of  whose  labor  is  included  in  the  product  already 
given. 

Among  those  classed  as  carpenters,  masons,  plasterers,  and 
painters,  in  the  occupation  tables,  are  many  who  are  very 
irregularly  employed,  and  many  low-grade  mechanics,  whose 
average  income  is  quite  small.  I  present  the  following  estimate 
of  wages  (or  product  which  is  the  same  in  value)  of  those  whose 
labor  product  is  not  embraced  in  the  foregoing  statement, 
except  laborers  in  railway  construction,  and  seventy-five  thou- 
sand lumbermen  embraced  under  head  of  laborers : 


THE  DISTRIBUTION  OF  WEALTH.  63 

Table  No.  5. 

PBODUCT  OP   WORKERS    NOT   INCLUDED   IN  EMPLOYMENT  TABLES 

OP   CENSUS. 

rk-.««^„*i«»                                  No.  of  Wages  Average 

Occupation.                               Workers.  or  Product.  Wages. 

Tailors  and  tailoresses 53,834  $21,533,600  $400  00 

Milliners,  dressmakers,  seamstresses         181,662  49,957,050  275  00 

Butchers,  retail 90,000  36,000,000  400  00 

Jewellers 15,000  6,600,000  400  00 

Blacksmiths      59,812  59,200,000  400  00 

Shoemakers 148,000  20,934,200  850  00 

548,308  $194,224,850 

Painters  and  paper-hangers  ....          49,000  $17,150,000  $350  00 

Plasterers 22,183  7,764,000  350  00 

Masons 78,000  31,200,000  400  00 

Builders  and  contractors 12,000  12,000,000  1,000  00 

Carpenters 296,300  103,705,000  350  00 

457,483  $171,819,000 

Laborers 1,475,000  $442,500,000  $300  00 


Clerks,  salesmen,  accountants    .    .   .  445,513 

Agents 18,623 

Saloon-keepers,  bar-tenders,  etc.  .   .  68,461 

Traders  and  dealers     . 481 ,450 

Officials  and  employes  of   express 

companies 14,860 

Officials  and  employes  of  trade  and 

transportation 9,702 

Others  in  trade  and  transportation   .  159,389 


1,197,898       $598,949,000        $500  00 


Total 3,678,689    $1,407,492,850 

If  we  add  this  sum,  less  $53,730,000,  the  value  of  labor  al- 
ready counted  in  the  items  "  lumber"  and  "  railway  construc- 
tion," to  the  total  product  before  ascertained,  we  have  the  sum 
of  $6,615,540,287. 

The  number  of  workers  whose  labor  product  is  now  included 
in  this  total  is  15,074,981.  The  number  of  workers  in  all  occupa- 
tions reported  in  the  census,  as  shown  in  the  occupation  tables,  is 
17,392,099.  The  number  whose  labor  is  embraced  in  the  fore- 
going estimates  is  therefore  2,317,118  less  than  the  whole  num- 


64  THE  DISTRIBUTION  OF  WEALTH. 

ber  of  workers.  The  number  of  workers  returned  under  the 
head  of  "telegraphs"  and  "telephones"  is  18,256 ;  under  the  head 
of  "  personal  and  professional  service"  is  4,074,238.  Of  these 
1,859,223  are  classed  as  "  laborers."  The  nature  of  the  work 
performed  by  the  persons  designated  as  laborers  not  being 
stated,  it  cannot  be  ascertained  to  what  extent  their  work  may 
be  properly  classed  under  the  head  of  personal  service.  But  if 
they  should  all  be  considered  as  engaged  in  some  form  of  crea- 
tive industry,  the  number  already  included  in  the  foregoing 
estimate  is  only  102,103  less  than  the  total  number  of  workers 
engaged  in  constructive  work,  or  in  work  the  cost  of  which  was 
added  to  the  value  of  the  product.  The  work  of  persons  en- 
gaged in  transportation  or  trade  enters  into  the  value  of  the 
product  passing  through  their  hands,  just  as  the  work  of  the 
farmer  or  manufacturer. 

The  cost  of  production  and  of  transportation  and  the  wages 
of  merchants,  clerks,  book-keepers,  travelling  salesmen,  traders, 
and  all  middle-men,  are  already  included.  There  yet  remains  to 
consider  the  earnings  of  capital  emplo3'ed  in  trade,  which  enter 
into  the  price  of  the  product  as  distributed  at  retail.  There 
must  be  added  a  sum  sufficient  to  cover  the  rent  of  buildings 
and  the  profits  of  capital  employed  in  the  wholesale  and  retail 
trade.  There  are  no  statistics  which  furnish  adequate  data  for 
an  estimate  of  the  amount  of  the  contribution  to  capital  in  this 
form;  $500,000,000,  which  is  ten  per  cent,  of  $5,000,000,000,  will 
not  exceed  the  true  amount,  and  this  we  will  assume  to  be  the 
earnings  of  capital  employed  in  trade.  To  this  we  will  add 
$30,000,000,  Mr.  Nimmo's  estimate  of  the  value  of  illuminating 
gas,  and  $40,000,000,  his  estimate  of  the  meat  product  and 
wool  clip  of  the  ranches, — items  which  have  not  yet  been 
counted.  This  gives  a  total  product  of  $7,185,540,287.  This 
sum  I  regard  as  adequate  to  express  the  total  product  of 
all  industries  of  the  United  States  in  1879.  The  only  way  in 
which  the  amount  can  be  materially  increased  is  by  raising  the 
estimate  of  the  earnings  of  capital  in  trade,  or  of  the  wages  of 
those  classes  of  workers  whose  wages  are  not  embraced  in  the 
returns  of  the  census.  If  we  increase  our  estimate  of  the  earn- 
ings of  capital  in  trade,  the  share  of  the  capital  of  the  total 
product  will  be  increased.     If  we  increase  the  estimate  of  the 


THE  DISTRIBUTION  OF  WEALTH.  56 

wages  of  the  workers  whose  wages  are  not  embraced  in  the 
census  returns,  the  actual  earnings  of  capital  will  remain  the 
same,  while  the  share  of  labor  will  be  increased  absolutely  and 
relatively.  But  no  estimates  within  the  scope  of  reasonable 
limits  will  greatly  modify  the  general  results  arrived  at. 

There  is  no  method  by  which  the  profits  of  capital  employed 
in  agriculture  may  be  determined.  The  amount  of  capital  em- 
ployed in  agriculture,  including  land,  according  to  census  esti- 
mates, is  not  less  than  $12,000,000,000.  Three  per  cent,  of  this 
sum  would  be  $360,000,000,  leaving  to  the  credit  of  labor  em- 
ployed in  agriculture  $1,852,540,927,  or  $241.52  to  each  worker. 

WAGES. 

Table  No.  6. 

wages  in  industries  other  than  agriculture,  as  shown 
by  census. 

Occupation.  -     No.  Employed.        '^^wate?^*^  W&IT 


Manufacturing  and  mechanical .  2,732,595  $947,953,795 
Mining  coal   and  non-precious 

metals 229,475  71,992,502  346.73 

Mining  gold  and  silver  ....  76,000  *  60,000,000  *  800.00  * 

Quarries      39,000  f  15,000,000*  384.61* 

Petroleum      9,869  4,381,572  454.10 

Salt 4,289  1,260,023  293.77 

Kailway  employes 418,957  195,350,013  466.27 

Merchants'  steam-craft   ....  63,843  25,982,803  406.98 

Fisheries 131,426  39,427,800*  300.00* 

Boat-building 21,345  12,713,813  595.63 

Telegraphs 14,928  4,886,128  327.30 

Telephones    , 3,338  901,400*  300.00* 


Total 3,744,065         $1,379,849,849       $368.54 

Omitting    telegraphs  and   tele- 

pliones 3,725,799  $1,374,062,321 


*  Estimated. 

t  Census  returns  highest  number  employed  during  the  year,  not  average 
number,  as  in  other  industries ;  the  average  number  is  much  smaller.  The 
total  wages  are  much  less  than  the  amount  given. 


56  THE   DISTRIBUTION   OF  WEALTH. 

The  total  net  product  of  the  above-enumerated  industries, 
telegraphs  and  telephones  excepted-,  after  deducting  materials, 
and  the  product  of  the  passenger  traffic  on  railways,  was 
$2,925,506,510.  Deducting  $1,374,062,321,  the  total  amount  of 
wages  paid,  from  the  value  of  the  product,  there  remains  the 
sum  of  $1,551,444,189  to  cover  any  expenses  which  have  not 
been  deducted,  to  supply  waste  of  capital,  and  apply  as  profits 
on  capital  invested. 

I  omit  the  receipts  of  railways  on  account  of  passenger  traffic, 
for  the  reason  that  a  large  part  of  these  receipts  represents  dis- 
tribution and  not  production.  The  larger  part,  perhaps,  should 
be  credited  to  production ;  but  it  cannot  be  ascertained  as  a 
separate  element,  and  is  covered  in  the  form  of  salaries  of 
persons  engaged  in  trade. 

The  earnings  of  railways  were  as  follows : 

Passenger  traffic $144,101,709 

Express  earnings 8,828,259 

Mail  services 10,472,813 

Freight 417,047,813 

Total $580,450,594 

Under  the  head  of  "  freight"  are  included  $902,055  of  "  earn 
ings  not  analyzed." 

The  amount  added  to  the  value  of  the  product  by  transporta- 
tion is  expressed  in  the  amount  of  charges  for  freight,  express, 
etc.  The  expenses  of  railway  companies  ^re  not  deducted  from 
amount  of  product  in  tabular  statement  No.  7,  wbich  appear  in 
this  chapter,  for  the  reason  that  these  "  expenses"  cover  cost  of 
maintaining  capital,  and  improvements  as  well.  The  cost  of 
maintaining  capital  is  not  deducted  from  product  of  other  in- 
dustries in  column  showing  product,  and  should  not  be*  therefore, 
in  case  of  railways. 

The  net  product  of  the  manufacturing  and  mechanical  indus- 
tries is  $1,972,755,642.  The  amount  of  wages  paid  is  $947,953,975. 
The  product  remaining  is  $1,024,801,847.  The  total  capital 
employed  in  the  .manufacturing  and  mechanical  industries  is 
returned  at  $2,790,272,606,  a  little  over  $1000  to  each  worker. 
The  claim  has  been  made  that  this  amount  is  not  sufficiently 
large.     It  does  not  cover  the  value  of  rented  buildings,  and 


THE  DISTRIBUTION  OF  WEALTH.  67 

probably  does  not  embrace  the  greater  portion  of  borrowed 
capital ;  and  yet  a  considerable  portion  of  borrowed  capital  is 
no  doubt  included. 

The  annual  consumption"  of  capital  occasioned  by  the  wear 
and  destruction  of  buildings,  machinery,  and  tools,  and  in  the 
destruction  of  stock  by  fire,  and  the  waste  of  machinery 
occasioned  by  the  progress  of  invention,  cannot  exceed  ten  per 
cent,  upon  the  capital  invested  ;  it  is  probably  very  much  less. 

If  we  assume  $3,000,000,000  as  the  actual  amount  of  capital 
invested,  and  estimate  the  amount  of  taxes  paid  as  one  per  cent., 
and  the  waste  of  capital  at  ten  per  cent.,  and  deduct  the  amount 
of  taxes  and  waste  of  capital  from  the  manufacturers'  net  product 
after  paying  wages,  we  have  remaining  $694,801,847,  or  23.16 
per  cent,  on  the  capital  employed. 

It  is  claimed  by  Mr.  Nimmo  that  the  census  valuation  of 
products  of  manufacturing  industries  is  too  low ;  and  the  esti^ 
mate  I  have  made  of  the  amount  required  to  supply  the  waste 
of  capital  I  believe  to  be  too  high. 

The  same  rule  applied  to  the  cotton-goods  industry  gives  a 
net  profit  of  13.26  per  cent. ;  applied  to  the  woollen-goods  in- 
dustry it  shows  a  net  profit  of  13.45  per  cent. ;  to  blast-furnace 
industry,  7.13  per  cent. ;  steel-rail  industry,  55.9  per  cent.* 

In  the  aggregate  iron  and  steel  industries  in  the  United  States, 
the  surplus,  after  deducting  wages  and  materials,  is  22.47  per 
cent.  In  the  manufacture  of  flouring-  and  grist-mill  products 
the  surplus  is  26.56  per  cent.,  in  meat  slaughtering  and  meat 
packing  the  surplus  is  51.22  per  cent.,  in  the  manufacture  of 
boots  and  shoes  the  surplus  is  47.92  per  cent.,  and  in  the  manu 
facture  of  agricultural  implements  the  surplus  is  thirty-five 
per  cent. 

The  wear  and  the  displacement  of  machinery  resulting  from 
new  inventions  in  different  manufacturing  industries  varies 
greatly ;  and  a  rate  per  cent,  which  would  represent  the  average 
waste  of  capital  in  all  the  industries  could  not  be  applied  to 
particular  industries. 

*  Instead  of  saying  net  profit,  it  would  be  more  accurate  to  say  a  net  con- 
tribution to  capital  of  the  given  per  cent,  of  the  capital  shown  to  be  invested. 
A  portion  of  this  amount  goes  to  pay  rent  and  interest  on  borrowed  capital. 
What  portion  the  census  does  not  inform  us. 


58 


THE   DISTRIBUTION   OF  WEALTH. 


The  annual  dividends  of  New  England  manufacturing  com- 
panies, from  the  year  1877  to  the  year  1886  inclusive,  range 
from  nothing  to  twenty  per  cent.  The  average  dividends  made 
by  seven  different  establishments  showing  the  largest  dividends, 
for  this  period  of  ten  years,  are  18.2  per  cent.,  14.9  per  cent., 
13.5  per  cent.,  12.1  per  cent.,  10.7  per  cent.,  9.2  per  cent.,  and 
8.6  per  cent. 

Since  accrued  earnings  are  often  invested  in  new  buildings  and 
machinery,  which  represent  an  increase  of  capital,  and  do  not 
in  such  cases  appear  in  the  form  of  dividends,  dividends  de- 
clared may  represent  only  a  portion  of  accrued  profits. 

The  Pall  Mall  Gazette  recently  published  the  results  of  the 
quarterly  stock  takings  of  nineteen  Lancashire  cotton-spinning 
companies.    The  statement  is  as  follows : 


Per  cent,  per 

Company.  annum  on 

Capital. 

Dowry  .    .    .  •. 14J 

Equitable 9^ 

Ivy 18 

Leesbrook 24J 

Rigefield 18 

Eochdale 39 

Stanley 9| 

Duke 19 

Albert 9 

Hathershaw 10 

New  Earth 9 

Park  Side 15 

Eoyton 16 

Hollinwood .  20 

West  End llj 

Lees  Union 18 

Grosvenor 20 

Hope 17 

Oak 16 


Dividends 
declared. 


9 


10 

11^ 

10} 

IJ 

9 


10 
10 

10 
10 

n 

10 


If  to  the  amount  of  the  wages  of  those  employed  in  the  speci- 
fied industries  of  Table  No.  6  we  add  the  wages  of  retail  butchers, 
mechanics,  traders,  and  others  embraced  in  Table  No.  5,  we  ob- 
tain the  total  amount  of  the  earnings  of  labor  in  all  the  creative 
industries  except  agriculture.     The  result  is, — 


THE   DISTRIBUTION   OF  WEALTH.  69 

Wages  of  Table  No.  6 $1,374,002,821 

"       «'  Table  No.  6 1,407,492,860 

Total  earnings  of  labor  except  agriculture $2,781,655,171 

Earnings  of  labor  in  agriculture 1,862,540,927 

Total  wages  in  all  creative  industries $4,684,096,098 

Number  of  workers  in  all  industries  except  agriculture  .   .   .  7,404,488 

"  »        »  agriculture 7,670,493 

Total  number  of  those  whose  earnings  are  embraced  in  product  15,074,981 
Average  wages  to  each  worker  in  all  industries  except  agri- 
culture      $376.66 

Allowing  three  per  cent,  on  capital  employed  in  agriculture  to 

the  credit  of  profits,  there  remains  to  the  credit  of  labor  .    .  1,852,540,927 

Average  wages  in  agriculture  would  be 241.62 

Profits  reserved  to  capital  in  agriculture 360,000,000 

Portion  of  product  reserved  by  capital  in  other  industries  .    .  2,191,464,189 

The  expenses  of  railways,  other  than  those  included  under 
the  head  of  wages,  were,  not  including  taxes,  $144,166,288. 
Fuel  for  steam-craft  costs  about  $15,000,000;  and  $16,800,000 
will  cover  the  waste  of  capital  not  already  covered  under  the 
head  of  wages.  The  waste  of  capital  in  all  other  industries 
besides  agriculture,  railways,  and.  steam-craft,  I  have  placed  at 
$400,000,000,  as  a  sum  sufficient  to  cover  the  entire  waste  of 
capital  employed  in  the  production  of  the  values  embraced  in 
the  total  product  stated.  Allowance  has  already  been  made  for 
the  waste  of  capital  in  agriculture. 

The  total  amount  of  direct  taxes  for  the  census  year  is  given 
as  $312,750,721.  $130,000,000  will  closely  approximate  the 
amount  of  taxes  paid  by  the  capital  (agriculture  omitted)  em- 
ployed in  the  production  of  the  values  embraced  in  the  fore- 
going total.  The  sum  of  $705,966,208  we  will  therefore  assume 
covers  the  waste  of  capital  and  direct  taxes.  Deducting  this 
amount  from  the  product  reserved  by  capital,  we  have  remain- 
ing to  the  credit  of  capital  at  the  end  of  the  year  $1,485,478,981. 

The  rewards  of  labor  in  agriculture  are  less  uniform  than  in 
any  other  industry.  While  the  average  is  given  as  $241.52.  in 
some  localities  the  average  will  not  exceed  one  hundred  dol- 
lars ;  and,  as  to  individuals,  the  range  will  run  from  nothing  to 
six  hundred  dollars  or  more. 


60  THE  DISTEIBUTION   OF   WEALTH. 

SUMMARY   STATEMENT. 

Total  number  employed  in  agriculture 7,670,493 

"  "  "  other  creative  industries 7,404,488 

"  "  "  all  creative  industries 16,074,981 

**  **  "  persona  land  professional  service, 

telegraphs  and  telephones  .   .    .  2,317,118 

Total  number  employed  in  all  industries 17,392,099 

Total  value  of  product  of  agriculture $2,212,540,927 

Estimated  product  of  industries  not  tabulated  in  census  .    .    .  1,407,492,850 

Product  of  manufacturing  and  mechanical  industries  ....  1,972,755,642 
Product  of  other  tabulated  industries  and  timber  not  otherwise 

counted  (see  Table  No.  4) 622,750,868 

Kailway  and  water  transportation  of  freight 500,000,000 

Cost  of  capital  employed  in  trade,  estimated 600,000,000 

Illuminating  gas 30,000,000 

Wool  clip  and  meat  product  on  ranches 40,000,000 

Total  product $7,185,540,287 

Cost  of  distribution  as  included  in  foregoing  statement  (about 
fifty  per  cent,  on  value  of  product  distributed) $1,598,944,000 

Total  amount  of  wages  or  earnings  of  labor  in  all  creative 

industries $4  634,096,098 

Portion  of  product  reserved  by  capital 2,551,444,189 

«'             "          credited  to  capital  in  agriculture     ....  360,000,000 

<«            «'          reserved  by  capital  in  other  industries    .    .  2,191,444,189 

Earnings  of  railways  in  passenger  traffic  and  mail  service  .    .  154,574,522 

"         "  capital  in  all  industries  except  agriculture     .    .  *.  2,346,018,711 

Amount  of  direct  taxes  and  waste  of  capital,  not  including 

agriculture      $705,966,208 

Balance  remaining  to  the  credit  of  capital  in  industries  other 

than  agriculture 1,640,052,618 

Product  to  each  worker  in  agriculture $288.45 

"          "                "         all  industries 476.66 

»          "                "        manufacturing 721.93 

Average  wages  in  all  creative  industries 307.50 

«<          "          "            «'            "        except  agriculture 375.65 

"          "      in  manufacturing  and  mechanical  industries    ....  346.98 

"          "      in  agriculture      241.52 

«          '«      Table  No.  5,  estimated 382.60 

-  "          "      in  trade,  estimated 500.00 


THE  DISTRIBUTION  OP  WEALTH.  61 

Contribution  to  capital  in  agriculture,  less  taxes |240,000,000 

«              "            "    other  industries 1,640,052,513 

Interest  on  national  debt,  paid  in  1879 105,327,949 

««        "   State  and  municipal  debt,  1879 66,062,740 

Rent  of  dwellings  in  excess  of  cost  of  maintenance,  estimated  30,000,000 
Interest  on  moneys  loaned  or  sales  on  credit  to  farmers  and 
others,   not    including    money   invested    in   manufacture, 

mining,  trade,  or  transportation,  estimated 70,000,000 

Total  contribution  to  capital  in  1879 $2,161,443,202 

Deduct  labor  cost  of  banking  and  brokerage  paid  by  capital, 
herein  embraced,  estimated 25,000,000 

Net  contribution  to  capital  in  1879 $2,126,443,202 

Express,  telephone,  telegraph,  and  street-car  companies  have 
not  been  embraced  in  foregoing  statement,  it  being  impracti- 
cable to  determine  their  additional  contribution  to  value  of 
product  considered.  If  taken  into  account,  general  results 
would  be  little  altered,  but  the  relative  share  of  capital  would 
be  increased. 

Taxes  on  agriculture  may  be  stated  relatively  too  high.  But 
if  all  corrections  were  made  so  as  to  conform  strictly  to  true 
amounts,  and  all  omissions  were  supplied,  general  results  would 
not  vary  greatly  from  the  figures  here  exhibited.  The  contri- 
bution to  capital  in  the  form  of  cost  of  distribution  is  probably 
greater  than  is  here  shown.  The  contribution  to  capital  arising 
out  of  different  forms  of  speculation  is  not  shown. 

It  will  be  observed  that  the  question  as  to  what  are  the 
profits  of  particular  industries  is  not  essentially  involved  in 
determining  the  shares  of  capital  and  labor  of  the  total  product. 
We  have  ascertained  with  sufficient  accuracy  the  amount  of 
wages  earned,  and  the  total  value  of  the  product.  What  is  not 
distributed  as  earnings  of  labor  goes  to  capital. 

The  addition  to  product  by  reason  of  foreign  importations 
would  be  the  increase  of  value  of  imports  over  cost.  The  labor 
cost  of  distribution  is  counted.  The  increase  would  go  to  the 
share  of  capital. 

The  following  table  exhibits  the  industries  in  detail.  Tele- 
graphs and  telephones  are  included,  and  passenger  traffic  is 
embraced  in  railway  product.  The  figures  are  taken  from  the 
census  of  1880,  except  as  otherwise  noted. 


62 


THE  DISTEIBUTION  OF  WEALTH. 


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THE  DISTRIBUTION  OF  WEALTH.  63 

From  the  statement  of  product  furnished  by  Mr.  Nimmo  and 
adopted  by  Mr.  Atkinson,  the  cost  of  distribution  and  the  prod- 
uct embraced  in  Table  No.  5  both  appear  to  be  omitted.  The 
aggregate  of  these  omitted  products  is  $3,006,426,850.  Deduct- 
ing this  amount  from  the  total  product  as  shown  in  this  chapter, 
we  have  a  remaining  product  of  $4,179,103,437  against  Mr. 
Atkinson's  total  of  $9,817,900,000,— less  than  one-half. 

The  inequalities  of  distribution  do  not  fully  appear  in  the 
foregoing  exhibit.  While  the  average  wages  in  the  different 
industries  are  shown  to  vary  greatly,  the  range  of  individual 
wages,  which  is  not  shown,  is  from  one  hundred  dollars  or  less 
to  the  highest  salary  paid. 

Among  the  causes  of  these  wide  differences  is  the  fact  that 
the  number  of  skilled  workers  is  relatively  small.  There  were 
returned  as  "  laborers"  in  1880, — that  is,  persons  without  a  trade 
or  special  occupation, — 1,859,223  workers,  of  whom  1,616,504 
were  males  between  sixteen  and  fifty-nine  years  of  age.  The 
number  of  agricultural  laborers  (owners  or  proprietors  of  farms 
not  included)  is  3,323,876. 

The  excessive  ratio  of  crude  to  skilled  labor  is  in  great  meas- 
ure owing  to  the  following  causes :  (1)  foreign  immigration,  (2) 
the  natural  immobility  of  labor,  and  (3)  to  the  obstructions 
placed  in  the  way  of  industrial  education  by  the  opposition  of 
the  workers  in  skilled  industries. 

In  order  to  measure  the  full  effect  of  the  large  contribution  to 
capital,  shown  in  the  distribution  of  the  annual  product,  we 
must  take  into  account  the  fact  that  the  capital  which  is  most 
widely  distributed — that  is,  capital  employed  in  agriculture — 
receives  but  a  small  share  of  this  contribution,  and  that  the  reve- 
nue-bearing capital  of  the  country  is  owned  by  a  comparatively 
small  number  of  persons. 

The  effect  is  naturally  and  necessarily  a  rapid  aggregation  of 
the  durable  property  and  credits  of  the  country,  which  repre- 
sent the  annual  savings  of  industry,  in  the  hands  of  the  few, 
the  loss  of  industrial  independence  on  the  part  of  the  working 
people,  and  the  administration  of  the  wealth  of  the  country 
without  due  regard  to  the  interests  of  those  who  produce  it. 

The  report  of  the  Bureau  of  Labor  of  the  State  of  Massachu- 
setts for  the  year  1888  shows  the  following : 


64  THE   DISTEIBUTION   OF  WEAI^TH. 

The  average  earnings  to  each  worker  in  manufacturing  in- 
dustries were  $402.02,  ranging  from  $276.31  to  $789.11  for  the 
year  1888. 

The  wages  paid  amounted  in  1887  to  66.02  per  cent.,  and  in 
1888  to  63.92  per  cent,  of  the  total  product  of  the  industries 
(net  product  after  deducting  cost  of  materials)  considered.  The 
amount  devoted  to  "  profit  and  minor  expenses"  was,  in  1887, 
33.98  per  cent.,  and  in  1888,  36.08  per  cent,  of  the  product. 

The  percentage  of  the  product  devoted  to  "  profit  and  minor 
expenses"  in  certain  specified  industries  was  as  follows : 

Industry.  1887.  1888. 

Boots  and  shoes 23.20  20.93 

Carpetings 41.47  40.45 

Cotton  goods 41.21  42.29 

Leather 40.19  42.93 

Metals  and  metal  goods 43.39  42.68 

Woollen  goods 53.98  52.63 

Worsted  goods 33.98  36.08 

The  percentage  ratio  of  "  profit  and  minor  expenses"  to  the 
capital  employed  was  : 

Industry.  1887.  1888. 

Boots  and  shoes 22.33  18.30 

Carpetings 15.67  15.42 

Cotton  goods 13.05  14.70 

Leather 20.06  23.71 

Metals  and  metallic  goods 26.82  24.77 

Woollen  goods 22.15  20.77 

Worsted  goods 13.36  15.24 

The  increase  of  capital  devoted  to  production  in  1887  ovei 
1886  was  9.43  per  cent. ;  the  increase  in  tho  value  of  the  goods 
produced  was  5.29  per  cent. 

The  proportion  of  the  product  to  the  full  capacity  of  the  estab- 
lishments was,  in  1886, 77.48  per  cent.,  and  in  1887, 77.80  per  cent. 

The  report  of  the  Bureau  of  Labor  of  the  State  of  Connec- 
ticut for  the  year  1889  shows  the  following : 

Numher  of  industries  considered 22 

Numher  of  estahlishments  embraced  in  report 241 

Total  capital  employed $85,863,552.26 

Total  product 86,929,133.43 


THE  DISTRIBUTION  OF  WEALTH.  66 

Cost  of  stock  or  materials $46,368,405.47 

Cost  of  manufacturing  (less  interest,  rents,  and  taxes)  ....  81,621,592.93 

Kent,  interest,  and  taxes 1,690,420.52 

Net  profits 7,248,711.51 

Wages  paid 22,482,824.66 

Number  of  hands  employed 63,147 

Wages  paid  ai-e  per  cent,  of  net  product 66.8 

Number  of  employes  classed  as  superintendents,  book-keepers, 
salesmen,  and  not  included  in  "number  of  hands  em- 
ployed"    2,708 

The  number  classed  as  superintendents  are  5.08  per  cent,  of 
wage -earners.  Cost  of  superintendence  is  15.08  per  cent,  of 
wages  paid  and  4.32  per  cent,  of  the  cost  of  goods  manufactured. 

Average  wages  of  persons  classed  under  head  of  superintendence  .     $1261.80 

"  "         all  other  workers 860.30 

"  "         all  employes 401.66 

The  net  profits  of  capital  in  the  specified  industries  are  stated 
as  follows: 

Industry.  Per  cent  of  Profit. 

Bakeries 15.61 

Brass 9.68 

Clocks 1.73 

Corsets 13.32 

Cotton  goods 7.03 

Cutlery 12.78 

Carriages 11.39 

Forgings 7.94 

Hardware 7.64 

Hats     13.11 

Iron  foundries • 12.36 

Iron,  malleable 7.41 

Knit  goods 15.20 

Machine-shops 10.31 

Paper  boxes 25.19 

Paper-mills 12.58 

Printing  and  publishing 8.80 

Eubber  goods .86 

Shoes .  7.61 

Silk  goods 12.32 

Silver  plating 7.04 

Woollen  goods 7.41 

General  average 8.44 

6 


QQ  THE  DISTEIBUTION   OF  WEALTH. 

The  net  profit  here  given  is  after  the  payment  of  taxes, 
interest,  and  rents. 

It  would  add  to  the  value  of  these  reports,  if  it  were  made 
clear  just  what  is  embraced  under  the  head  of  capital,  and  what 
are  the  values  placed  upon  land,  machinery,  buildings,  etc.  In 
Connecticut  the  information  is  furnished  voluntarily,  some  man- 
ufacturers refusing  to  make  statements;  and,  from  the  report 
of  the  commissioner,  it  appears  that  there  existed  among  manu- 
facturers the  apprehension  that  the  public  might  be  misled  in  the 
direction  of  an  over-estimate  of  the  profits  made,  and  that  no  ac- 
count would  be  taken  of  the  losses  incurred  by  those  who  fail.  So, 
in  the  absence  of  any  showing  as  to  the  manner  in  which  "  capital" 
was  itemized  in  the  statements  made,  we  may  be  excused  if  we 
express  some  doubt  as  to  the  entire  accuracy  of  these  reports.  It 
is  possible  that  borrowed  capital  may  have  been  included  under 
the  head  of  "  capital."  The  work  of  the  labor  bureaus  in  both 
Massachusetts  and  Connecticut  is  not  lacking  in  accuracy  or  com- 
pleteness. But  the  voluntary  statements  of  private  individuals 
are  necessarily  exposed  to  the  suspicion  of  being  more  or  less 
modified  to  accord  with  the  purposes  of  those  who  make  them. 
From  the  foregoing  statistics  of  Massachusetts  and  Connecticut, 
it  appears  that  the  worker  (including  superintendence)  receives 
as  wages  from  fifty-five  to  sixty-six  per  cent,  of  the  product.  In 
these  States  less  than  twenty  per  cent,  of  the  wage-earners  in 
manufacturing  industries  own  their  own  homes.  Those  who  pay 
rent  will,  on  the  average,  if  heads  of  families,  spend  one-fifth  of 
their  earnings  for  rent.  In  paying  out  their  earnings  for  articles 
of  food,  clothing,  and  other  things  purchased  at  retail,  ten  per 
cent,  at  least  of  the  expenditure  is  a  contribution  to  capital  in  the 
form  of  profits  on  trade  and  rent  of  buildings  occupied  for  pur- 
poses of  trade.  And,  considering  all  factors  that  enter  into  the 
problem,  it  is  safe  to  say  that  over  one-half  of  the  labor  product 
of  the  wage-earners  in  manufacturing  industries  is,  in  some 
form,  absorbed  by  capital ;  and  this  in  addition  to  the  amount 
required  for  the  maintenance  of  capital. 

In  agricultural  industries  the  same  relation  between  labor  and 
capital  does  not  exist,  except  in  part.  Such,  however,  is  the  asso- 
ciation of  the  industries,  that  what  touches  one  reaches  all,  as  a 
chain  of  lakes  is  drained  by  an  outlet  from  one  of  the  number. 


THE  DISTRIBUTION   OF  WEALTH.  67 

In  order  to  obtain  the  measure  of  the  profits  on  capital  em- 
ployed in  agriculture,  whore  the  worker  generally  owns  the 
capital  which  he  employs,  we  may  deduct  from  the  value  of 
the  gross  product  the  labor  cost  of  production,  estimating  the 
cost  of  labor  at  the  customary  wages  paid  to  agricultural  labor- 
ers hired  by  the  day  or  month.  This  method  univei'sally  ap- 
plied to  the  agriculture  of  the  United  States  would  exhibit  no 
margin  of  profit.  If  we  measure  the  profits  of  agricultural 
capital  by  the  average  rental  paid,  which  ranges  from  one-third 
to  one-half  the  gross  product,  the  landlord  paying  taxes  and 
maintaining  improvements  and  defraying  cost  of  supervising 
tenants,  the  margin  of  profit  through  a  series  of  years  will 
range  from  nothing  to  ten  per  cent.,  while  the  average  earnings 
set  apart  to  the  share  of  labor  will  fall  to  two  hundred  dollars,  or 
less,  per  year.  This,  however,  is  on  the  basis  of  the  crops  and 
prices  of  the  year  1879.  Prices  during  subsequent  years  have 
been  on  an  average  much  lower. 

It  will  be  seen  that  in  the  division  of  the  total  product  of  the 
nation,  agricultural  labor  and  capital  employed  in  agriculture 
have  received  the  smallest  shares  awarded  to  any  class  of  labor 
or  capital. 

WORKERS    EMPLOYED     IN    PERSONAL    AND    PROFESSIONAL    SERVICE. 

The  number  of  persons  returned  in  census  of  1880,  as  engaged 
in  personal  and  professional  service,  is  4,074,238.  Of  these, 
17,000  of  those  whose  occupations  are  designated  perform  work 
the  cost  of  which  enters  into  the  value  of  products.  Of  those 
whose  occupation  is  given,  whose  labor  does  not  enter  directly 
into  the  cost  of  production,  and  whose  earnings  are  therefore 
omitted  from  the  estimate  of  value  of  products,  the  following 
is  a  complete  list  : 

Table  No.  8. 

No.   1. 

Actors 4,812 

Showmen  and  employes  of  shows    ....:....  2,604 

Artists  and  teachers  of  art 9,104 

Musicians  and  teachers  of  music 30,477 

Billiard-  and  bowling-saloon  keepers  and  employes  .   .  1,543 

Authors,  lecturers,  literary  persona 1,131 

Journalists 12,308 

61,979 


68  THE  DISTRIBUTION  OF  WEALTH. 

No.  2. 

Chemists,  assayers,  etc 1,961 

Designers,  draughtsmen,  and  inventors 2,820 

Collectors  and  claim  agents 4,213 

Clerks  and  copyists,  not  otherwise  specified    ....  25,467 

Watchmen  (private)  and  detectives 13,384 

Lawyers 64,137 

Teachers  and  scientific  persons 227,710 

339,692 
No.    3. 

Midwives 2,118 

Nurses 13,483 

Dentists 12,314 

Veterinary  surgeons 2,130 

Physicians  and  surgeons 85,671 

Clergymen 64,698 

Sextons 2,449 

182,868 
No.  4. 

Barters  and  hair-dressers 44,851 

Launderers  and  laundresses 121,942 

Janitors 6,763 

Messengers 13,985 

Domestic  servants 1,075,635 

Livery-stable  keepers 14,213 

Hostlers 81,697 

1,309,086 
No.   5. 

Hotel-keepers 32,453 

Lodging-house  keepers 77,413 

Restaurant-keepers 13,074 

Clerks  in  hotels  and  restaurants 10,916 

Other  employ&  of  hotels  and  restaurants 77,413 

211,269 
No.   6. 

OflScers  of  United  States  army  and  navy 2,600 

Soldiers,  sailors,  and  marines 24,161 

Officials  of  government 67,081 

Clerks  in  government  offices 16,849 

Employes  of  government 31,601 

"        "  charitable  institutions 2,396 

144,688 
Total  number  of  persons  engaged  in  personal 
and  professional  service,  the  character  of 

whose  employment  is  designated 2,249,577 


THE  DISTRIBUTION  OP  WEALTH.  69 

The  support  of  the  professional  and  personal  service  class  is 
borne  by  those  engaged  in  productive  labor.  Those  designated 
in  subdivision  No.  6,  of  the  foregoing  table,  derive  their  support 
from  all  classes  equally,  except  in  so  far  as  our  system  of  raising 
revenue  may  bear  unequally  on  different  classes.  The  support 
of  those  designated  in  subdivision  No.  3  may  be  considered  as 
resting  about  one-third  on  the  agricultural,  and  two-thirds  on 
other  classes.  Farmers  "  doctor"  a  good  deal,  but  their  spiritual 
wants  are  administered  to  by  clergymen  in  receipt  of  small 
salaries.  The  agricultural  classes  may  contribute  one-fourth  of 
those  designated  in  Nos.  1  and  2,  and  one-fifth  of  the  support 
of  those  designated  in  No.  4,  and  one- twentieth  of  the  support 
of  those  designated  in  No.  5.  On  the  basis  of  these  assumptions, 
the  support  of  those  engaged  in  professional  and  personal  service 
would  rest,  about  one-eighth  on  the  agricultural,  and  seven- 
eighths  on  the  other  classes.  Assuming  that  the  earnings  of 
this  class  of  persons  amount  to  $700,000,000,  the  agricultural 
classes  would,  on  this  basis,  contribute  out  of  that  portion  of 
the  total  product  set  apart  to  their  credit  $87,500,000,  and 
$612,500,000  would  be  derived  from  the  other  classes.  But 
since  "  the  other  classes"  include  those  engaged  in  professional 
and  personal  service,  who  employ  each  other,  something  like 
one-fifth  of  their  earnings  would  consist  of  wages  derived  from 
their  own  class,  and  there  would  remain  about  $472,500,000  to 
be  contributed  by  workers  in  other  productive  industries  be- 
sides agricultural.  The  greater  part  of  this  amount  is  paid  from 
the  fund  representing  the  total  wages  of  labor  and  that  portion 
of  the  product  already  assigned  to  the  maintenance  of  capital, 
though  a  very  considerable  amount  is  derived  out  of  the  fund 
set  to  the  credit  of  the  profits  of  capital.  If  we  assume  that 
the  amount  of  $172,500,000  is  paid  from  this  fund,  the  balance 
remaining  to  the  credit  of  capital  would  be  $1,954,943,202. 
What  becomes  of  this  fund  ? 

First,  there  is  that  part  which  is  consumed  in  the  form  of 
perishable  products ;  second,  that  part  which  is  converted  into 
new  factories,  mills,  and  increase  of  machinery,  new  railways, 
and  other  forms  of  tangible  and  durable  property ;  and  third, 
that  part  which  is  invested  in  notes,  bonds,  and  mortgages,  and 
which  reappears  in  the  form  of  property  in  the  hands  of  farm- 


70  THE  DISTRIBUTION   OF  WEALTH. 

ers,  laborers,  and  other  debtors ;  or  is  represented  by  the  amount 
of  the  consumption  of  other  classes  beyond  their  incomes ;  to 
the  extent  of  which  they  are  necessarily  in  debt.  The  entire 
labor  product,  each  year,  is  consumed  in  some  form ;  if  in  the 
form  of  perishable  products,  it  is  destroyed ;  if  in  the  form  of  in- 
vestment in  buildings,  or  like  durable  property,  it  represents  so 
much  added  to  the  national  wealth. 

MANUFACTURES   OP   ONE   HUNDRED  LEADING   CITIES. 

The  census  of  1880  gives,  separately,  the  statistics  of  manu- 
facturing and  mechanical  industries  in  one  hundred  leading  cities 
of  the  United  States,  from  which  I  have  deduced  the  following 
summary : 

Total  population  of  one  hundred  leading  cities 9,100,745 

Capital  employed  in  cities 11,399,619,618.00 

"  "  outside 1,590,652,988.00 

Total  capital  employed $2,990,272,606.00 

Materials  used  in  cities $1,925,987,807.00 

"  '»     outside 1,470,835,742.00 

Total  materials  used $3,396,823,549.00 

Gross  product $5,369,579,191.00 

Net  product  in  cities $1,119,381,024.00 

"        "        outside 853,375,618.00 

Total  net  product $1,972,756,642.00 

Product  to  each  worker $721.93 

Per  cent,  of  capital  employed  in  cities,  of  net  product .    .  125.0 

((  <<  "  outside 186.0 

Number  of  hands  employed  in  cities 1,451,177 

t<  "  "        outside 1,280,788 

Total  number  of  hands 2,731,965 

Wages  paid  in  cities $561,710,845.00 

«        "     outside 386,242,950.00 

Average  annual  wages 346.98 

((           «<           <«       in  cities 388.45 

«t          II          «<       outside 301.55 


THE  DISTRIBUTION  OP   WEALTH.  71 

Total  number  of  workers  in  all  occupations 17,892,099 

"         "  "  "  male 14,744,942 

it         "  it  ««  female 2,647,167 

It         it  it  it  males  over  fifteen .   .  13,919,755 

it  a  it  a  it        a    sixty    .    .       933,644 

Per  cent,  of  females,  of  all  ages,  and  of  males  under  fifteen  .   .   .  24.9 

Total  number  engaged  in  agriculture 7,670,493 

•"          "              "                   "          females 594,510 

"          it              a                   "          males  under  fifteen  ....  584,867 

"          "              "                   ««               "     over  sixty 662,938 

it          a               a                    "                "       '»   fifteen 6,491,146 

Per  cent,  of  females,  all  ages,  and  males  under  fifteen 16.87 

Total  number  classed  under  head  of  professional  and  personal  service  4,074,238 

Domestic  servants 1,075,655 

Per  cent,  of  females,  all  ages,  and  of  children  under  fifteen  in  pro- 
fessional and  personal  service 36.54 

Per  cent,  of  females  and  males  under  fifteen,  domestic  servants    .  0.90 

Number  engaged  in  professional  and  personal  services,  about    .    .  2,300,000 

Total  number  engaged  in  trade  and  transportation 1,810,256 

Per  cent,  of  females,  all  ages,  and  males  under  fifteen 4.7 

Total  engaged  in  manufacturing  and  mining 3,837,112 

males 3,205,124 

"    over  sixty  .    .    .  139,602 

"    under  fifteen.    .  86,677 

females 631,988 

"      under  fifteen  .  46,930 

"      over  sixty  .   .  7,901 

The  following  is  a  summary  statement  of  Edward  Atkinson's 
deductions  and  estimates  of  product  and  distribution  for  the 
census  year  1879.* 

Total  annual  product 110,000,000,000 

Domestic  consumption  on  farms,  and  domestic  product  of 
families  not  exchanged 1,000,000,000 

Commercial  product $9,000,000,000 

Share  of  capitalists,  five  per  cent $450,000,000 

Savings  of  people,       "  "         450,000,000 

Addition  to  the  wealth  of  the  nation .         900,000,000 

Wages  fund $8,100,000,000 

*  Atkinson,  Distribution  of  Products,  page  141. 


(( 

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11                                    t 

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72  THE  DISTEIBUnON   OP  WEALTH. 

Share  of  1,100,000  persons  engaged  in  mental  and  adminis- 
trative work,  $1000  each,  including  teachers,  scientists, 
authors,  artisans,  young  lawyers  and  clergymen,  mer- 
chants, tradesmen,  officials $1,100,000,000 

16,200,000  farmers,  mechanics,  artisans,  operators,  clerks, 

dress-makers,  lahorers,  and  others  at  $432  each 7,000,000,000 

Total $8,100,000,000 

Total  assumed  product  accounted  for  above $10,000,000,000 

He  then  adds  5  per  cent,  upon  this  gross  product  to  account 
for  the  larger  consumption  of  well-to-do-farmers,  trades- 
men, shop-keepers,  and  other  classes,  making 500,000,000 

$10,500,000,000 
He  says  ("  Distribution  of  Products,"  page  109),  "  In  general,  it 
may  be  said  that  the  necessary  qualifications  by  which  the  aver- 
age wages  disclosed  by  the  census,  in  respect  to  all  manufactures, 
should  be  governed  would  lead  to  the  conclusion  that  three  hun- 
dred and  forty-six  dollars  represented  not  over  ten  months'  work, 
and  if  then  we  added  one-fifth  of  three  hundred  and  forty-six 
dollars  to  make  up  for  the  two  months,  we  reach  a  general  aver- 
age, including  the  administrative  force,  of  four  hundred  and  fifteen 
dollars  each, — again  substantially  corresponding  with  the  conclu- 
sion of  the  writer."  Again,  speaking  on  the  same  subject,  page  108, 
he  says,  "  But  this  result  must  be  subjected  to  very  important 
qualifications.  The  list  of  occupations,  listed  under  the  term  of 
manufactures,  includes  brick-making,  which  can  only  be  followed 
six  months  in  the  year.  .  .  .  The  wages  of  cotton  manufacture 
appear  to  be  only  two  hundred  and  forty-five  dollars  each,  per 
year,  by  far  the  larger  portion  of  those  employed  being  women 
and  children ;  but  in  his  (Mr.  Weeks')  judgment,  this  sum  should 
be  raised  to  at  least  two  hundred  and  eighty  dollars,  and,  includ- 
ing administrative  force,  to  perhaps  three  hundred  dollars  a  year, 
in  order  that  it  may  be  made  to  correspond  to  the  full  year's 
work  of  those  who  were  continuously  employed." 

Now,  if  the  purpose  were  to  ascertain  average  monthly  wages, 
there  would  be  ground  for  this  statement.  But,  when  we  are 
endeavoring  to  ascertain  the  total  amount  of  wages  paid  to  the 
working-force  of  the  country,  the  proposal  to  add  one-fifth  to 
the  amount  actually  paid,  for  the  reason  that  workers  were  em- 
ployed but  four-fifths  of  the  time,  could  never  be  made  except 


THE  DISTRIBUTION  OF  WEALTH.  73 

by  some  ono  zealous  to  verify  estimates  which  cannot  be  verified 
in  a  more  rational  manner. 

It  is  true  that  there  are  those  who  are  employed  but  a  part 
of  the  year  in  their  special  calling,  who  are  employed  in  other 
industries  during  part  of  the  year.  But,  if  they  engage  in  any 
of  the  industries  reported,  their  labor  and  wages  are  counted. 
If  they  are  employed  at  something  else,  what  is  it  ?  Most  fre- 
quently in  agriculture.  The  product  of  that  industry  is  counted. 
They  are  not  carpenters,  nor  blacksmiths,  nor  merchants  j  what 
do  they  do,  that  Mr.  Atkinson  proposes  to  count  full  time  and 
pay  them  at  the  rate  of  four  hundred  and  fifteen  dollars  per  year  ? 

The  truth  is,  as  indicated,  and  as  every  person  who  looks  about 
him  knows,  that  the  labor  unemployed  during  the  course  of  a 
year  represents  more  than  one-fifth  of  the  entire  labor  power  of 
the  country.  The  product  of  the  manufacturing  industries  could 
be  doubled,  without  drawing  from  other  industries,  or  from  the 
common  labor  of  the  country,  those  who  could  not  be  spared. 

Capital,  in  its  struggle  to  maintain  its  margin  of  profit,  checks 
production  and  hinders  distribution;  and  Mr.  Atkinson  feeds 
idle  labor  on  a  priori  estimates  of  what  might  be  if  labor  were 
employed  the  year  round. 

The  effect  of  the  unequal  and  inequitable  division  of  the 
product  between  capital  and  labor,  in  aggregating  the  wealth 
of  the  country,  demands  special  consideration,  which  will  be 
given  in  the  following  chapter  on  the  Distribution  of  Wealth. 

THE   WEALTH   OF   THE  UNITED   STATES. 

Forty-three  billion  dollars  has  been  the  generally  accepted  es- 
timate in  round  numbers  of  the  total  wealth  of  the  United 
States  in  1880.  How  this  amount  is  arrived  at  appears  from  the 
following,  which  is  given  by  Mr.  Atkinson  as  the  census  valua- 
tion of  the  wealth  of  the  United  States  in  1880. 

1.  Farms $10,197,000,000 

2.  Kesidence  and  business  real  estate,  including  water-power .      9,881,000,000 

3.  Eailroads  and  equipments 5,636,000,000 

4.  Telegraphs,  shipping,  and  canals 419,000,000 

6.  Live-stock  on  and  off  farms,  farming-tools,  and  machinery     2,406,000,000 

6.  Household  furniture,  paintings,  books,  jewelry,  household 

supplies  of  food,  fuel,  etc 6,000,000,000 

$33,439,000,000 


74  THE  DISTRIBUTION   OF  WEALTH. 

Brought  forward $33,439,000,000 

7.  Mines,  petroleum  wells,  quarries,  and  one-half  the  annual 

product  thereof  reckoned  as  the  average  supply  in  the 

hands  of  producers  or  dealers 781,000,000 

8.  Three-quarters  of  the  annual  product   of  agriculture, 

manufactures,  and  annual  importation  of  foreign 
goods,  assumed  to  he  the  average  supply  in  the  hands 
of  producers  and  dealers 6,160,000,000 

9.  Churches,  schools,  asylums,  public  huildings  of  all  kinds, 

and  other  real  estate  exempt  from  taxation 2,000,000,000 

10.  Specie 610,000,000 

11.  Miscellaneous  items,  including  tools  of  mechanics   .    .    .         650,000,000 

Total $43,640,000,000 

The  statement  that  this  is  the  census  valuation  is  misleading. 
Several  items  are  made  up  largely  of  estimates  for  which  there 
is  no  reliable  data.  This  is  true  of  Items  2,  6,  9,  and  11.  Some 
of  the  estimates  are  evidently  too  high,  and  Item  No.  8  is  double 
what  it  should  be.  No.  3,  railroads  and  equipments,  is  put 
down  as  the  sum  of  the  stock  and  indebtedness  of  railway  com- 
panies. The  net  incomes  of  railways  amounted  to  four  per  cent, 
on  this  valuation.  Many  railroads  are  mortgaged  for  fifty  per 
cent,  more  than  what  would  be  the  present  cost  of  construction. 
The  amount  of  earnings  in  excess  of  fixed  charges  was  but 
$40,385,000,  or  five  per  cent,  of  $807,700,000.  Adding  this  latter 
sum  to  the  indebtedness,  we  have  $3,620,000,000.  But,  estimated 
according  to  what  would  have  been  the  cost  in  1880,  the  valua- 
tion should  not  be  more  than  $3,000,000,000. 

Three-fourths  of  the  products  of  agriculture  and  manufactures 
amount  to  but  $3,140,000,000.  Imported  foreign  goods  ought 
not  to  be  included,  except  the  amount  of  the  excess  of  value 
over  exports,  which  is  a  small  item. 

The  total  capital  invested  in  mining  (except  precious  metals), 
petroleum  wells,  quarries,  and  salt  manufacture,  and  one-half  the 
annual  product  amounts  to  but  $523,000,000. 

Making  the  corrections  here  suggested,  the  statement  would 
stand  as  follows : 

1.  Farms $10,197,000,000 

2.  Eesidence  and  husiness  real  estate,  including  water-power, 

machinery,  etc 9,881,000,000 

$20,078,000,000 


THE  DISTRIBUTION  OF  WEALTH.  75 

Brought  forward 120,078,000,000 

8.  Kailroads  and  equipments 8,000,000,000 

4.  Telegraphs,  shipping,  and  canals 419,000,000 

5.  Live-stock  on  and  oflf  fanns,  farming-tools,  and  machinery     2,406,000,000 

6.  Household  furniture,  paintings,  books,  etc 5,000,000,000 

7.  Mines,  petroleum  wells,  quarries,  and  one-half  the  an- 

nual product     526,000,000 

8.  Three-quarters  of  the  annual  product  of  agriculture  and 

manufactures 8,140,000,000 

9.  Churches,  schools,  asylums,  public  buildings,  and  other 

real  estate  exempt  from  taxation 2,000,000,000 

10.  Specie 610,000,000 

11.  Miscellaneous  items,  including  tools  of  mechanics   .   .   .         660,000,000 

Total $37,828,000,000 

The  total  assessed  valuation  in  1880,  including  credits,  was 
$16,902,993,543.  The  taxes  assessed  amounted  to  $312,750,721. 
A  considerable  amount  of  the  property  here  enumerated  is 
owned  in  foreign  countries.  Taking  the  fact  into  account,  and 
allowing  for  over-estimate  in  Items  2,  5,  and  11,  I  am  of  the 
opinion  that  the  value  of  the  property  owned  by  the  people  of 
the  United  States  in  1880  did  not  exceed  $35,000,000,000. 

DISTRIBUTION   OF   WEALTH. 

In  the  collection  of  statistics  hitherto,  no  effort  has  been 
directed  towards  ascertaining  how  the  wealth  of  the  nation  is 
divided  among  individual  owners.  Statisticians  have  been  con- 
tent with  general  averages,  and  an  exhibition  of  the  relative 
wealth  of  States  and  counties.  When  the  census  of  1880  was 
taken,  the  subject  of  the  individual  distribution  of  wealth  had 
not  yet  forced  itself  upon  the  attention  of  legislators  and  of 
government  officials  in  charge  of  that  work. 

The  doctrine  that  if  property  exists  it  is  not  a  matter  of 
public  concern  who  owns  it  has  been  often  announced,  but 
more  frequently  tacitly  accepted  by  those  who  would  not  care 
to  openly  avow  it. 

It  is  said,  in  behalf  of  the  accumulation  of  wealth  in  great 
individual  fortunes,  that  millionaires  are  but  trustees  holding 
title  to  property  for  the  benefit  of  the  people  at  large.  And  so 
doubtless  in  a  romantic  sort  of  way  they  sometimes  regard 
themselves. 


76  THE  DISTRIBUTION  OP  WEALTH. 

It  would  accord  with  the  general  principles  of  equity,  were 
the  immense  acquisitions  of  some  to  be  treated  by  the  State 
as  resulting  trusts,  properly  subject  to  gradual  distribution 
through  the  agency  of  graded  income  taxes  and  laws  affecting 
the  distribution  of  the  estates  of  deceased  persons. 

Mr.  Thomas  Gr.  Shearman,  in  an  article  in  the  November 
(1889)  number  of  the  Forum,  enumerates  by  name  a  list  of 
millionaires  as  follows,  omitting  names  : 

2  owners  of $150,000,000  $300,000,000 

6  "  100,000,000  500,000,000 

1  "  70,000,000  70,000,000 

2  "  60,000,000  120,000,000 

6  "  50,000,000  300,000,000 

6  "  40,000,000  240,000,000 

4  "  35,000,000  140,000,000 

13  "  30,000,000  390,000,000 

10  "  25,000,000  250,000,000 

4  «  22,500,000  90,000,000 

15  »  20,000,000  300,000,000 

68  "  $2,700,000,000 

Mr.  Shearman  gives  the  following  exhibit  from  the  Boston  tax- 
list  of  1888  : 

Individual  Average 

Tax-Payers.  Assessed  Wealth. 

2 14,600,000 

4 3,205,000 

3 2,732,570 

8 1,840,000 

39 930,000 

133 500,000 

1065 160,000 

Mr.  Shearman  assumes  that  an  assessment  of  four  hundred 
thousand  dollars  represents  an  estate  of  one  million  dollars,  and 
that  an  assessment  of  seventy-five  thousand  dollars  represents 
an  estate  of  one  hundred  and  fifty  thousand  dollars,  making  a 
difference  in  the  ratio  of  assessments  to  total  wealth  between 
very  large  estates  and  comparatively  small  estates,  for  the 
reason  that,  where  estates  are  very  large,  the  chances  for  under- 
valuations and  omissions  are  greater  than  in  smaller  estates. 
This  view  is  in  accord  with  general  observation  and  experience. 


THE  DI8TBIBUTI0N  OF  WEALTH.  77 

From  English  statistics  showing  gradations  of  wealth,  and 
from  the  foregoing  figures,  Mr.  Shearman  reaches  a  basis  of 
classification,  which,  applied  to  the  ascertained  facts,  gives,  as  a 
result,  the  following  exhibit  of  the  distribution  of  the  wealth  of 
the  people  of  the  United  States.  A  population  of  sixty-five 
millions  and  a  total  wealth  of  sixty-one  billion  five  hundred 
million  dollars  are  assumed.  I  regard  the  amount  of  estimated 
wealth  as  somewhat  too  large ;  but,  as  affecting  the  question 
of  distribution,  it  is  not  necessary  to  attempt  more  than  an 
approximate  estimate  of  the  amount.  The  rule  of  general 
averages  applied  by  Mr.  Shearman  will  doubtless  yield  general 
results  approximately  correct ;  but  it  can  only  be  applied  where 
large  numbers  are  embraced. 

DISTRIBUTION   IN   CLASSES. 


No.  of 

Total 

Average 

^amUies. 

Wealth. 

per  Family. 

70 

2,625,000,000 

137,500,000 

80 

1,025,000,000 

11,500,000 

180 

1,440,000,000 

8,000,000 

135 

968,000,000 

6,800,000 

360 

1,656,000,000 

4,600,000 

1,755 

4,036,000,000 

2,300,000 

6,000 

7,000,000,000 

1,250,000 

7,000 

4,550,000,000 

650,000 

11,000 

4,125,000,000 

875,000 

14,000 

3,220,000,000 

230,000 

16,500 

2,722,000,000 

165,000 

50,000 

5,000,000,000 

100,000 

75,000 

4,500,000,000 

60,000 

200,000 

4,000,000,000 

20,000 

1,000,000 

3,500,000,000 

3,500 

2,000,000 

4,000,000,000 

2,000 

9,620,000 

7,215,000,000 

800 

13,002,080  161,582,000,000 

From  this  table  it  will  appear  that  seventy  families  own  one- 
twenty-fifth,  or  four  per  cent,  of  the  wealth  of  the  nation  ;  eight 
hundred  and  forty-five  families,  or  about  one-fifteen-thousandth 
part  of  the  population,  own  one-eighth  of  the  total  wealth,  and 
less  than  one-fifteen-hundredth  of  the  population  own  three- 
sevenths  of  the  total  wealth,  and  one-thirty-fourth  of  the 
population  own  over  seventy  per  cent,  of  the  total  wealth. 


7B  THE  DISTRIBUTION   OF   WEALTH. 

A  high  degree  of  accuracy  for  these  figures,  in  detail,  cannot 
be  claimed ;  but  that  the  first  half  of  the  table  approximates 
somewhat  closely  the  actual  distribution  of  wealth  there  is  no 
reason  to  doubt.  The  distribution  of  wealth  among  farmers  and 
in  villages  cannot  be  brought  under  the  operation  of  the  same 
rule,  and  is  more  equitable  than  is  here  shown. 

The  following,  from  Mulhall's  table  of  incomes  of  the  British 
people  for  the  year  1883,  indicates  the  distribution  of  wealth  in 
that  kingdom : 

Class.                               No.  of  Families.              Total  Income.  Average. 

Gentry 222,000  $1,665,000,000  $7600 

Middle 604,000                 1,205,000,000  1991 

Trade 1,220,000                 1,220,000,000  1000 

Working 4,629,000                 2,235,000,000  482 

Total 6,675,000  $6,325,000,000 

One-thirtieth  of  the  whole  population  absorb  a  little  less  than 
one-fourth  the  earnings  of  the  British  nation.  The  earnings  of 
the  gentry  and  middle  classes  are  derived  chiefly  from  rents,  in- 
terest, and  profits  on  invested  capital. 

The  incomes  of  the  British  people  in  1877,  as  given  by 
Mulhall,  are  as  follows : 

Income.                       England.  Scotland.  Ireland.  United  Kingdom. 

No.  No.  No.                      No. 

Over  $250,000  .   .    .            71  16  4                    90 

$50,000  to  250,000  ...          904  132  31                1,067 

6,000  to    50,000.   .   .     18,622  2,191  878              21,691 

750  to      5,000  .   .   .   275,733  27,642  14,473            317,848 


Over  $750  295,330  29,980  15,386  340,696 

A  considerable  portion  of  the  revenues  of  Great  Britain  are 
obtained  from  income  taxes,  and  statistics  therefore  furnish 
accurate  information. 

The  average  value  per  inhabitant  of  houses  in  England,  in 
1880,  was  $95 ;  Scotland,  $75,  and  in  Ireland,  $35. 

In  the  United  Kingdom  of  England,  Scotland,  and  Ireland, 
thirty-four  persons  own  over  one-eleventh  of  all  the  land.  The 
total  number  of  land-owners  is  180,524,  and  the  average  number 
of  acres  to  each  holding  is  390.    In  Ireland,  the  average  holding 


THE  DISTRIBUTION  OF  WEALTH.  79 

is  1120  acres;  in  Scotland,  2150;  in  England,  212.  The  number 
of  holdings  under  fifty  acres  is,  in  England,  3500 ;  Wales,  600  ; 
Scotland,  700 ;  Ireland,  7800.  The  land  of  England  comprises 
72,000,000  acres,  one-fourth  of  which,  not  counting  owners  of 
less  than  one  acre,  is  owned  by  1200  proprietors,  and  half  the 
entire  United  Kingdom  is  owned  by  2512  persons  out  of  a 
population  of  35,000,000.*  The  peers,  about  600  in  number, 
own  14,000,000  acres,  yielding  an  annual  rental  of  $66,000,000. 
The  Duke  of  Devonshire  owns  four  estates,  amounting  to 
115,000  acres;  the  Duke  of  Bedford,  72,000;  the  Duke  of  Port- 
land, 61,000;  the  Duke  of  Northumberland,  181,000;  "and  in 
every  county  there  are  properties  ranging  from  10,000 "to  30,000 
acres  in  the  possession  of  the  lords.  Seven  persons  own  one- 
seventh  of  Buckinghamshire,  which  has  a  population  of  175,000." 
Five  persons  own  one-ninth  of  the  land  in  Cambridge,  and  six- 
teen persons  own  two-sevenths  of  the  land  in  Cheshire,  where 
there  is  a  population  of  561,000. 

"  In  Ireland  the  situation  is  similar.  In  the  province  of  Mun- 
ster  eleven  persons  own  one-seventh  of  the  land.  In  Ulster,  a 
noble  marquis,  the  grandson  of  George  the  Fourth's  mistress, 
owns  122,300  acres ;  the  natural  son  of  another  marquis  owns 
58,000 ;  and  still  another  marquis,  married  to  a  woman  of  the 
town  now  living,  owns  34,000.  In  Connaught  two  persons  own 
274,000  acres ;  and,  besides  these,  Yiscount  Dillon  holds  83,000, 
and  the  Earl  of  Lucan  60,000.  Lord  Fitzwilliam  has  an  estate 
of  89,000  acres ;  the  Duke  of  Leinster  one  of  67,000 ;  Lord 
Kenmare  one  of  91,000  and  another  of  22,000;  Lord  Bantiy 
owns  one  of  69,000 ;  Lord  Lansdowne,  one  of  91,000,  another 
of  13,000,  and  another  of  9000  ;  Lord  Downshire,  one  of  26,000, 
one  of  15,000,  and  another  of  64,000  ;  Lord  Leitrim,  three  of 
54,000,  22,000,  and  18,000,  respectively.  The  Duke  of  Devon- 
shire, in  addition  to  his  enormous  English  properties,  has  one 
estate  of  32,000  acres,  and  another  of  27,000." 

In  Scotland,  "the  county  of  Sutherland  contains  1,290,253 
acres,  of  which  the  Duke  of  Sutherland  owns  1,176,343.  The 
population  of  the  county  is  24,317  souls.  Six  other  potentates 
hold  over  100,000  acres  among  them,  leaving  exactly  5295  acres 

*  Bateman's  Great  Land-Owners. 


80  THE  DISTRIBUTION   OF   WEALTH. 

for  the  rest  of  the  remaining  24,310  inhabitants.  There  are, 
however,  only  eighty-five  of  these  with  more  than  an  acre 
apiece. 

"Among  the  other  great  proprietors  in  Scotland  are  the 
Duchess  of  Sutherland,  who  owns  an  estate  of  149,000  acres  in 
her  own  right ;  and  the  Earl  of  Fife,  who  has  one  of  140,000, 
another  of  72,000,  and  another  of  40,000.  The  Duke  of  Eich- 
mond  has  one  of  155,000  and  another  of  69,000 ;  the  Earl  of 
Seafield,  one  of  96,000,  one  of  48,000,  and  one  of  16,000.  The 
Earl  of  Breadalbane  owns  one  of  193,000  and  one  of  179,000 ; 
the  Duke  of  Hamilton,  one  of  102,000  and  one  of  45,000 ;  the 
Duke  of  Buccleugh,  three  of  253,000,  104,000,  and  60,000,  re- 
spectively. The  Duke  of  Argyle  is  comparatively  poor;  he 
owns  only  168,000  acres.  ...  In  Invernesshire,  twenty  men 
own  2,000,000  acres  among  them;  and  in  Aberdeenshire, 
twenty-three  lords  and  gentlemen  own  more  than  half  the 
county,  though  the  population  is  244,000."  * 

Five  men  own  one-fourth  of  Scotland.  One  duke,  with  estates 
all  over  England,  has  300,000  acres  in  Scotland.  "  This  noble- 
man's park  is  fifteen  miles  in  circumference.  Another  duke  has 
estates  which  the  highway  divides  for  twenty-three  miles.  A 
marquis  there  is  who  can  ride  a  hundred  miles  in  a  straight 
line  on  his  own  land.  There  is  a  duke  who  owns  almost  an 
entire  county,  stretching  from  sea  to  sea.  An  earl  draws 
$1,000,000  every  year  from  his  estates  in  Lancashire.  A  duke 
regularly  invests  $400,000  a  year  in  buying  up  lands  adjoining 
his  already  enormous  estates.  A  marquis  enjoys  $5,000,000  a 
year  from  land.  An  earl  lately  died  leaving  to  his  heirs 
$5,000,000,  and  $800,000  a  year  income  from  land.  The  income 
from  land  derived  by  one  ducal  family  of  England  is  $5,000,000, 
which  is  increasing  from  year  to  year  by  the  falling  in  of 
leases.  One  hundred  and  fifty  persons  own  half  of  England ; 
seventy-five  persons  own  half  of  Scotland ;  thirty  persons  own 
half  of  Ireland."  f 

The  average  rental  value  of  land  in  England  (1880)  is  $7.70 
per  acre ;   in  Scotland,  $1.98 ;  in  Ireland,  $2.45.     The  average 

*  Adam  Badeau,  in  English  Aristocracy. 
f  Quoted  by  Kuskin,  in  Fors  Clavigera. 


THE  DISTRIBUTION  OF  WEALTH.  81 

value  of  land  in  England  was,  in  1875,  $210  per  acre.     The 
rental  was  a  little  under  three  per  cent,  on  the  value.* 

The  capital  of  the  people  of  Great  Britain,  invested  in  stocks, 
bonds,  and  mortgages,  outside  of  loans  and  mortgages  in  Aus- 
tralia, Brazil,  and  other  countries,  amounts  to  $17,455,000,000, 
and  yields  an  annual  income  of  $776,500,000,  an  average  of  4.4 
per  cent.  The  capital  embraced  in  this  statement  does  not 
include  lands  or  manufacturing  industries.  It  is  invested  as 
follows :  t 

Capital.       Rate  of  Interest, 
*^  per  cent. 

National  debt $3,845,000,000  3.0 

Eailways 3,850,000,000  4.0 

Banks      1,350,000,000  6.5 

Mines  and  iron 1,075,000,000  5.5 

Canals  and  docks 470,000,000  4.0 

Gas  and  water 360,000,000  8.0 

Telegraphs 150,000,000  5.7 

Insurance 100,000,000  6.0 

Shipping,  etc 965,000,000  6.0 

British $12,165,000,000  4.4 

Colonial  loans 740,000,000  5.0 

Indian  loans      770,000,000  4.0 

Indian  and  colonial  railways 930,000,000  5.4 

Foreign  loans  and  railways 2,850,000,000  4.5 

$17,455,000,000  4.4 

Making,  in  1883,  a  total  interest-bearing  capital  of  $17,4^5,000,000. 

Investments  of  capital  in  the  United  States,  as  shown  by  the 
census  of  1880,  are  as  follows : 

*  In  France  there  are  10,426,368  proprietors  who  own  less  than  five  acres 
each;  1,894,847  who  pwn  from  five  to  12.35  acres  each;  and  1,754,305  who 
own  12.35  acres  each  and  over;  seventy-five  per  cent,  of  the  total  number  of 
landed  proprietors  possess  but  ten  per  cent,  of  the  entire  area ;  thirteen  per 
cent,  of  the  proprietors  own  twelve  per  cent,  of  the  area ;  and  twelve  per  cent, 
of  the  proprietors  own  seventy-seven  per  cent,  of  the  entire  area.  There  are 
proprietors  owning  two  hundred  and  fifty  thousand  acres  devoted  to  the 
pleasures  of  the  chase.  Nearly  one-fourth  of  the  land  is  occupied  by  renters. 
About  one-third  is  cultivated  by  proprietors  with  the  aid  of  hired  labor; 
and  about  one-tenth  is  cultivated  and  owned  by  the  peasants  themselves. 

t  Mulhall. 

6 


82  THE   DISTRIBUTION   OF  WEALTH. 

Railways $5,425,722,560 

Merchants'  steam  craft 112,005,600 

Sail-vessels 50,152,950 

Telegraphs 76,068,747 

Telephones 13,723,119 

Petroleum      ' 27,325,746 

Salt 4,762,493 

Quarries 25,414,497 

Non-precious  minerals 364,909,324 

Fisheries 37,955,349 

Manufacturing 2,790,272,606 

Insurance  companies,  fire 204,450,532 

"                  "          life 442,272,471 

Loans  of  national  banks 878,500,000 

Public  debt  of  United  States 2,120,415,370 

State  and  municipal  debt 1,117,585,546 

113,691,536,910 

To  this  should  be  added  estimates  of  private  banks,  savings 
banks,  and  mining  precious  metals. 

Loans  of  private  banks  and  savings  banks $1,000,000,000 

Mining  gold  and  silver 400,000,000 

$1,400,000,000 
Other  loans  and  credits '.    .   .   .    $2,000,000,000 

The  mortgage  indebtedness  of  the  people  of  the  State  of  Illi- 
nois, in  1880,  was  $204,000,000.  The  wealth  of  the  people  of  the 
State  of  Illinois  was  one-fourteenth  part  of  the  wealth  of  the 
nation. 

If  the  mortgage  indebtedness  of  the  people  of  other  States 
were  as  great  in  proportion  to  wealth,  the  total  mortgage  in- 
debtedness of  the  people  of  the  nation  would.be  $2,856,000,000. 

A  portion  of  these  loans  represents  assets  of  insurance  com- 
panies, and  the  total  estimate  of  $2,856,000,000  would  be  doubt- 
less too  great.  The  total  amount,  not  including  capital  already 
enumerated,  did  not  probably  exceed  $2,000,000,000,  including 
private  credits  not  secured  by  mortgage,  other  than  bank 
loans. 

The  value  of  business  houses  used  in  trade,  and  of  houses 
rented  for  dwellings,  offices,  etc.,  was  probably  $4,000,000,000. 


THE  DISTRIBUTION  OP  WEALTH,  83 

Capital  employed  in  trade,  street  railways,  gas-works,  and  water- 
works, was  probably  $4,000,000,000  more,  making  a  total  of 
revenue-bearing  property  (besides  that  invested  in  agriculture) 
of— in  round  numbers —  625,000,000,000.  This  exceeds  the 
amount  of  capital  represented  by  property  employed  in  produc- 
tive industries.  The  excess  grows  out  of  the  public  debt  and 
other  credits  which  constitute  a  lien  on  the  whole  property  and 
productive  power  of  the  people. 

Further  illustration  of  the  distribution  of  wealth  is  found  in  the 
statistics  of  1880,  with  regard  to  United  States  registered  bonds. 

Total  amount  of  registered  bonds  .   . $644,990,400 

"    number  of  holders,  73,114 

Held  in  New  York 210,264,250 

Massachusetts 45,138,750 

Pennsylvania 40,230,050 

Ohio 16,445,050 

District  of  Columbia 12,419,050 

California 11,601,100 

Illinois 9,118,950 

Connecticut 8,894,400 

New  Jersey 8,104,150 

Maryland 6,989,600 

Ehode  Island 4,717,100 

New  Hampshire 4,658,100 

1378,580,550 

Other  States 38,958,300 

"        "      insurance  and  trust  companies    .   .   .    227,451,550 

Four  hundred  and  ten  million  dollars  are  held  in  sums  of  fifty 
thousand  dollars  and  over.  Fifteen  hundred  persons  hold  two- 
thirds  of  the  whole  amount. 

In  the  United  States  the  growth  of  monopoly  in  land  has  not 
yet  made  great  headway,  except  in  the  cities,  where  the  law  of 
"I  got  here  first"  is  the  foundation  of  many  great  fortunes. 
The  following  table  shows  the  distribution  of  agricultural  lands 
in  the  United  States  as  exhibited  by  the  census  of  1880. 

Total  number  of  farms 4,008,907 

'«          "        «  acres 536,081,835 

"  improved  land      284,771,042 

"  unimproved  land 261,310,793 


84  THE  DISTEIBUnON  OP  WEALTH. 

Average  number  of  acres  of  land  in  farms  ......  134 

"  "               "    improved 71 

"  '*                *'     unimproved 63 

Number  of  farms  cultivated  by  owners 2,984,806 

"  "      rented  for  money  rent 322,357 

'♦  **  "for  share  of  crops     ....      702,244 

"  "      under  3  acres 4,352 

«*  »      3  to  10  acres 134,889 

"  "       10  to  20  acres     . 254,749 

"  "      20  to  60  acres 781,574 

"  "      60  to  100  acres 1,032,810 

"  "       100  to  500  acres 1,695,983 

"  «'       500  to  1000  acres 75,972 

"  *'       1000  acres  and  over 28,578 

The  increase  of  large  farms  from  1870  to  1880  shows  a  large 
per  cent,  of  gain. 

HOMES   OF   WORKINGMEN. 

The  Illinois  Bureau  of  Labor  Statistics  has  collected  informa- 
tion showing  the  home  and  family  relations  of  47,287  workmen 
out  of  a  total  of  54,247  members  of  various  labor  organizations 
in  the  State  of  Illinois,  in  the  year  1886.  These  statistics  show 
that  23,764,  or  fifty-two  per  cent.,  are  heads  of  families.  The 
number  who  own  homes  is  6953,  or  twenty-eight  per  cent,  of 
those  who  are  heads  of  families.  In  Chicago  the  proportion  of 
those  who  own  homes  is  twenty-four  per  cent. ;  in  the  State  out- 
side of  Chicago,  the  proportion  is  forty-two  per  cent.  All  having 
a  proprietary  interest  in  homes  are  included.  The  number  of 
homes  under  mortgage  does  not  appear.  If  all  workingmen,  in- 
cluding those  not  members  of  any  labor  organization,  were  in- 
cluded, these  percentages  would  probably  be  somewhat  lowered. 

WAGES  IN  MASSACHUSETTS. 

The  report  of  the  statistics  of  Massachusetts  for  the  year  1888 
shows  the  following : 

The  average  annual  earnings  of  the  operatives  in  the  manu- 
facturing establishments  of  Massachusetts  for  the  year  1888  were 
$402.45  for  each  operative.  In  1887  the  average  to  each 
operative  was  $394.79. 


THE  DISTRIBUTION  OF  WEALTH.  85 

The  averages  in  the  several  industries  are  as  follows : 

Agricultural  implements $616.69 

Arms  and  ammunition 661.91 

Artisans' tools 668.28 

Boots  and  shoes 608.41 

Boxes,  paper  and  wooden 410.97 

Buttons  and  dress  trimmings 277.78 

Carpetings 848.66 

Carriages  and  wagons 634.41 

Chemical  preparations  (compounded) 709.04 

Clocks  and  watches 687.02 

Clothing 406.76 

Cooking,  lighting,  and  heating  apparatus 789.11 

Cordage  and  twine 841.98 

Cotton  goods 324.41 

Cotton,  woollen,  and  other  textiles 866.02 

Flax,  hemp,  and  jute  goods 276.81 

Food  preparations 418.61 

Furniture 486.23 

Glass 416.77 

Hose,  rubber,  linen,  etc 474.72 

Hosiery  and  knit  goods 838.41 

Leather 612.87 

Linen 802.29 

Liquors,  malt,  distilled,  and  fermented 688.72 

Machines  and  machinery 686.22 

Metals  and  metallic  goods 481.86 

Mixed  textiles 862.10 

Musical  instruments  and  materials 671.18 

Oils  and  illuminating  fluids 600.00 

Paper  and  paper  goods 407.46 

Print-works,  dye-works 411.13 

Eailroad  construction 413.12 

Kubber  and  elastic  goods 652.32 

Ship-building 630.19 

Silk  and  silk  goods 818.61 

Stone 641.68 

Straw  and  palm-leaf  goods 888.21 

Tallow  candles,  soap,  etc 461.72 

Wooden  goods 486.87 

Woollen  goods 851.98 

Worsted  goods 846.89 

Average $402.46 

The  average  wages  in  the  industries  named  for  the  United 


86  THE  DISTRIBUTION  OF  WEALTH. 

States  and  for  Massachusetts,  during  the  census  year,  and  for 
Massachusetts  during  the  State  census  year  of  1888,  were : 

T  ^  „x United  States  for        Massachusetts  for      Massachusetts, 

industry.  Census  Year  1880.        Census  Year  1880.  1888. 

Agricultural  implements     .    .  $385.07  $376.05  $516.57 

Carriages  and  wagons  ....  418.30  481.29  634.41 

Cotton  goods 245.93  274.08  324.41 

Food  products 257.80  422.84  418.61 

Glass 378.29  405.23  416.77 

Mixed  textiles 307.02  337.22  352.10 

Woollen  goods 298.51  329.65  351.98 


WAGES  IN  EUROPE  AND  AMERICA. 

The  following  tables  are  taken  from  Mulhall's  "Dictionary 
of  Statistics,"  published  in  London  in  1883 : 


artisans'  wages  in  1880 — shillings  per  week. 
Great  Britain.  France.  Belgium.  Germany.    Italy.   New  York.   Chicago. 


Printer.   .   . 

.    32 

20 

19 

20 

16 

54 

62 

Painter     .    . 

.    32 

21 

18 

16 

19 

54 

38 

Plumber  .   . 

.    33 

23 

25 

15 

16 

62 

66 

Tailor    .    . 

.    25 

21 

17 

15 

18 

58 

50 

Shoemaker 

.    31 

20 

14 

13 

18 

62 

56 

Carpenter  . 

.    33 

23 

23 

16 

17 

44 

42 

Mason   .    . 

.    35 

17 

25 

16 

15 

56 

33 

Smith    .    . 

.    31 

23 

18 

15 

16 

60 

44 

Tinsmith  . 

.   .    28 

18 

20 

16 

15 

60 

44 

Baker    .    . 

.    27 

23 

18 

15 

16 

.   , 

42 

Collier  .   . 

.   .    24 

15 

14 

16 

.   . 

. 

.   , 

wages  of  DAT-laborers  in  aqricultttre  in  1880. 

England 30  pence  =  60  cents. 

Scotland 18 

Ireland 28 

Prance 26 

Germany 18 

Kussia 12 

Austria 20 

Italy 10 

Holland 20 

Belgium      20 

Scandinavia   , 14 


(( 

66 

(( 

60 

(( 

36 

11 

24 

<( 

40 

(C 

20 

It 

40 

(( 

40 

(( 

28 

THE  DISTRIBUTION  OF  WEALTH.  87 

The  rise  in  agricultural  wages  between  1835  and  1880  was 

as  follows  :* 

Per  cent. 

England 60 

Scotland 75 

Ireland 126 

France 66f 

Germany 125 

Kusaia 100 

Austria 100 

Italy 160 

Holland 122 

Belgium 122 

Scandinavia , 86 

COTTON-MILL  OPERATIVES'  WAGES — SHILLINGS  PER  WEEK. 

England.      United  States. 

Sizers 36  40 

Weavers 30  35 

Pickers 16  28 

Strippers 17  28 

Cardboys 14  10 

Doffers 16  16 

"Warpers 15  16 

Winders 16  16 

WOOLLEN   OPERATIVES — SHILLINGS   PER  WEEK. 

England.    France.  Belgium.  Germany.   United  States. 

Sorter 24  22  lOf  Sf  44 

Carder 24  llf  8t  8t  25 

Spinner 12t  llf  .    .  12  26t 

Dresser 24  16  12  7t  54 

Weaver 30  24  18  12  35 

Fireman 26  19  15  .    .  35 

Carpenter 33  27  15  .   .  52 

Engineer 40  27  18  16  75 

*  For  the  greater  convenience  of  the  reader,  in  statistics  quoted  from 
European  authorities  I  have  in  many  places  substituted,  in  place  of  foreign 
denominations  of  money,  their  equivalents  as  stated  in  terms  of  American 
coin,  counting  the  English  pound  as  five  dollars  and  the  shilling  as  twenty- 
four  cents.  The  exact  equivalent  of  the  British  pound  is  twenty  shillings 
sterling,  equal  in  value  to  about  four  dollars  and 

.f  Females. 

OF  THE 


i  NITER  SIT  7 


88  THE  DISTRIBUTION  OP  WEALTH. 

BELATIOX   BETWEEN  WAGES  AND  FOOD — AVERAGE — SHILLINGS 
PER  WEEK. 

(The  reference  is  to  wages  of  artisans.) 

It  will  be  observed  that,  in  the  following  table,  the  estimate 
of  food  consumed  by  the  family  of  each  worker  in  the  United 
States  is  much  greater  than  in  Europe,  although  the  cost  of  food 
is  less,  the  food  of  the  American  working-man  being  of  a  different 
kind  and  quality. 

Rates  of 

Wages.        Food.      Surplxis.    Surplus, 

per  cent. 

Great  Britain 31  14  19  65 

France 21  12  10  43 

Germany 16  10  6  38 

Belgium 20  12  8  40 

Italy •   •   16  9  6  40 

Spain 16  10  6  38 

United  States 48  16  32  67 

Australia 40  11  29  72 

WAGES    IN    GERMAN    TEXTILE    INDUSTRIES.* 

In  textile  industries  over  fifty  per  cent,  of  employes  are 
women,  receiving  a  weekly  wage  of  from  ten  to  twelve  marks 
($2.50  to  $3.00). 

WAGES  PER  HOUR. 

Hand  workmen 3|  to  6  cents. 

Factory  operatives 5    to  7J      " 

Female  workers .    .   .   2J  to  3J      " 

Persons  from  fourteen  to  sixteen   .......    1|^  to  2        " 

Children,  twelve  to  fourteen i^  to  1    cent. 

In  Berlin  a  skilful  seamstress  is  supposed  to  earn  from  $2.25 
to  $2.70  per  week ;  an  inexperienced  seamstress  about  half  as 
much.     Board  of  a  sewing -girl  about  $2.30  per  week. 

Mr.  Tom  Mann,  president  of  the  Dockers'  Union,  London,  in 
the  May  number  of  the  Nineteenth  Century,  states  that  the  chain- 
makers  of  Credly  Heath,  England,  work  for  $2.40  or  $2.88  per 
week ;  that  the  lock-filers  of  Staffordshire  get  less  still,  and  that 
thousands  of  laborers  in  Lancashire,  in  towns  like  Bolton,  get 
no  more  than  $3.60  per  week ;  that  in  towns  like  Ipswich,  in 

*  American  Consular  Eeports,  February,  1888. 


THE  DISTRIBUTION  OF  WEALTH.  89 

the  eastern  counties,  many  are  working  for  $2.64  and  $2.88 
per  week,  out  of  which  they  have  to  pay  eighty  cents  for  rent 
and  twenty-eight  cents  for  coals ;  and  that  before  the  great 
strike  in  London,  thousands  of  dock-laborers  considered  them- 
selves fortunate  if  they  averaged  $1.92  a  week. 

The  United  States  Commissioner  of  Labor,  in  a  statement 
laid  before  Congress,  of  recent  date,  gives  the  following  com- 
parative statement  of  the  average  wages  of  certain  classes  of 
laborers  in  Great  Britain  and  in  the  United  States : 

Class  of  Employes.                                        Great  Britain.  United  States. 

Engineers,  per  day $1.46  $3.22 

Firemen          "        91  1.79J 

Conductors     "        97  2.63 

Switchmen     "        85  1.50J 

Flagmen         "        81  1.13 

Engineers'  yearly  earnings 457.00  1007.00 

Firemen's       "            "          285.00  562.00 

Conductors'    "            "          804.00  824.00 

Switchmen's  «'            <* .  266.00  471.00 

Flagmen's      "            "         .......   254.00  854.00 

The  average  weekly  wages  of  potters  are ; 


IJnited  States    ....  $10.00 

England 5.20 

France 4.78 

Germany 3.60 


Austria $3.17 

Japan 2.50 

India 1.75 

China 1.50 


In  China  day-laborers  are  hired  for  ten  cents  per  day,  includ- 
ing meals.  The  average  wages  of  a  field-hand  are  twelve  dollars 
per  annum,  with  food,  straw  shoes,  and  free  shaving.  His  clothing 
costs  about  four  dollars.  He  may  save  eight  dollars  per  annum. 
An  acre  of  land  is  worth  one  hundred  and  fifty  dollars.  Ten 
years'  savings  will  enable  a  young  man  to  buy  one-third  of  an 
acre  and  the  necessary  tools  for  farming.  In  twenty  years  he 
may  save  enough  to  purchase  two-thirds  of  an  acre,  and  in  six 
years  more  enough  to  purchase  a  wife,  with  whose  assistance  he 
can  maintain  himself  on  his  own  land  and  consider  himself  in- 
dependent. 

Land  in  China  is  minutely  subdivided,  many  holdings  being  as 
low  as  one-sixth  of  an  acre. 


90  THE  DISTRIBUTION   OF   WEALTH. 

The  tenant  pays  the  farmer  one-half  of  the  rice-crop.  The 
crop  on  an  acre  is  worth  ahout  thirty-nine  dollars. 

A  family  of  six  persons  will  consume  about  six  pounds  of  rice 
per  day,  worth  about  ten  cents.  A  farmer  pays  two  per  cent, 
per  month  for  what  money  he  may  borrow.  * 

In  Japan  (1885)  daily  wages,  without  board,  in  agriculture, 
are  18.6  cents  for  men  and  12.1  cents  for  women.  The  average 
monthly  wages,  with  board,  are  $2.12  for  men  and  $1.10  for 
women.  Workmen  employed  in  preparation  of  tea  receive  25.8 
cents  per  day.  Day-laborers  receive  twenty  cents.  Domestic 
wages  for  women  are  $1.06  per  month,  with  board. 

I  find  in  "Prisoners  of  Poverty  Abroad,"  by  Mrs.  Helen 
Campbell,  published  in  1889,  the  following  table  of  prices  paid 
to  working-women  in  London  at  the  present  time ;  the  workers 
boarding  themselves : 

"  Making  paper  bags,  four  and  one-half  pence  to  five  and  one- 
half  pence  per  thousand ;  possible  earnings,  five  shillings  to  nine 
shillings  per  week.  .Button-holes,  three  pence  per  dozen; 
possible  earnings,  eight  shillings  per  week. 

"  Shirts,  two  pence  each,  worker  finding  her  own  cotton  ;  can 
get  six  done  between  6  a.m.  and  11  p.m. 

"  Sack-sewing,  six  pence  for  twenty-five ;  eight  pence  to  one 
shilling  six  pence  per  hundred ;  possible  earnings,  seven  shillings 
per  week. 

"  Pill-box  making,  one  shilling  for  thirty-six  gross ;  possible 
earnings,  one  shilling  three  pence  per  day. 

"  Button-hole  making,  one  penny  per  dozen ;  can  do  three  or 
four  dozen  between  5  a.m.  and  dark. 

"  Whip-making,  one  shilling  per  dozen ;  can  do  a  dozen  per 
day. 

"  Trousers  finishing,  three  pence  to  five  pence  each,'  finding 
own  cotton ;  can  do  four  per  day. 

"  Shirt  finishing,  three  pence  to  four  pence  per  dozen." 

WAGES   ONE   HUNDRED  TEARS   AGO. 

On  the  Pennsylvania  canals  the  diggers  were  paid  six  dollars 
per  month  from  May  to  November,  and  five  dollars  per  month 

*  Consular  Eeports,  September.  1887. 


THE  DISTRIBUTION   OF  WEALTH.  91 

from  November  to  May.  Hod-carriers  and  mortar-mixers,  dig- 
gers and  choppers,  who  worked  on  the  public  buildings  and 
cut  the  streets  and  avenues  of  Washington,  from  1793  to  1800, 
received  seventy  dollars  per  year.  The  hours  of  work  were 
from  sunrise  to  sunset.  Wages  at  Albany,  N.  Y.,  and  New  York 
City,  were  forty  cents  per  day ;  at  Lancaster,  Pa.,  eight  to  ten 
dollars  per  month  j  elsewhere  in  Pennsylvania,  six  dollars  in 
summer  and  five  dollars  in  winter.  In  Virginia  white  men 
received  sixteen  pounds  currency  per  year.  Slaves  were  hired 
at  one  pound  per  month.  A  pound,  Virginia  currency,  was 
equivalent  to  three  dollars  and  eighty-three  cents.  The  average 
rate  of  wages  all  over  the  country  was  sixty-five  dollars  per 
year,  with  food,  and  sometimes  lodging. 

WAGES  AND  PRICES  IN  THE  THIRTEENTH  CENTURY,  AS  ASCERTAINED 
BY  THE  INVESTIGATIONS  OP  PROFESSOR  THOROLD  ROGERS. 

Price  for  threshing  was,  for  wheat,  one-eighteenth  part ;  bar- 
ley, one-twenty-second  part ;  oats,  one-fourteenth  part.  In  the 
eighteenth  century  the  peasant  got  one-twenty-fourth  part  of 
wheat  and  barley,  and  one-twenty-first  part  of  oats.  The  aver- 
age crop  of  the  eighteenth  century  was  more  than  double  that 
of  the  thirteenth  century. 

Prices  of  reaping  in  thirteenth  century  were :  Wheat,  five 
pence  per  acre ;  barley,  five  and  one-half  pence ;  oats  and  rye, 
four  and  one-half  pence;  gathering  beans,  peas,  and  vetches, 
five  pence  per  acre ;  mowing  hay,  five  pence  per  acre. 

Meat  was  one-fourth  penny  per  pound.  Clothing  consisted  of 
homespun  russet  cloth,  hempen  or  linen  shirting,  rude  boots, 
worth  about  two  shillings,  and  leather  gaskins  worth  one  shill- 
ing and  six  pence.  Amount  required  for  the  support  of  a  farmer 
and  small  family  is  estimated  at  three  pounds  per  year,  and  the 
ordinary  savings  of  a  small  farmer  at  twenty  shillings  per  year. 

Carpenters'  wages  were  from  three  pence  to  three  and  one- 
half  pence  per  day ;  in  London,  from  four  pence  to  five  pence 
per  day. 

At  the  building  of  Newgate  gaol,  in  1281,  carpenters  received 
four,  five,  and  five  and  one-half  pence  per  day ;  masons,  five 
pence ;    sawyers,   nine  and  one-half  pence  per  pair.      Winter 


92  THE  DISTRIBUTION  OF  WEALTH. 

wages  were  about  twenty-five  per  cent,  less  than  for  other  sea- 
sons.    A  day  consisted  of  eight  hours'  labor. 

Board  cost  from  one  and  one-fourth  pence  to  one  and  one-half 
pence  per  day. 

Threshing  was  three  pence  for  wheat,  two  pence  for  barley, 
one  penny  for  oats,  per  quarter. 

Farm  wages  were  two  pence  per  day  for  men,  one  penny  for 
women,  one  half-penny  for  boys.  Wages  per  year,  including 
harvest,  two  pounds  fifteen  shillings. 

Hands  hired  by  the  year  received  a  quarter  (eight  bushels) 
of  wheat,  worth  four  shillings,  every  eight  weeks ;  six  shillings 
in  money  during  the  year,  and  board  in  harvest  and  other  ex- 
ceptional times. 

Domestic  servants  received  thirteen  to  fourteen  shillings  and 
board  per  year. 

An  advocate  retained  to  defend  a  will  received  six  shillings 
and  eight  pence ;  and  in  another  instance,  noted  by  Mr.  Eogers, 
a  fee  for  conducting  a  case  was  six  shillings  and  eight  pence. 

Advocates  and  clerks,  as  a  rule,  were  poorly  paid. 

On  account  of  the  competition  of  manufacturing  labor,  wages 
were  higher  in  the  eastern  counties. 

In  1333  the  income  of  a  lord  was  estimated  at  twenty  per 
cent,  on  his  capital.  Parsons  received  two-fifths  of  the  income 
of  the  lord  on  each  estate. 

Weston  Tower,  Oxford,  built  in  1448-50,  cost  twenty-eight 
pounds  eight  shillings.    It  would  now  cost  one  thousand  pounds. 

In  the  thirteenth  century  a  penny  contained  three  times  as 
much  silver  as  now. 

In  1260  money  was  worth  twelve  times  as  much  as  in  1760. 
And  Eogers  estimates  that  labor  was  better  paid  in  the  time  of 
Henry  III.  than  in  the  time  of  George  III. 

NOTES    PROM    CENSUS    OF   MASSACHUSETTS,    1885 — MANUPACTUEING 

INDUSTRIES. 

Number  of  wage-earners  employed  during  the  year  ending 
June  30,  1885,  419,966;  total  wages,  $147,415,316;  net  time 
actually  lost  by  establishments,  6.10  per  cent.  Greatest  number 
of  persons  who  could  be  advantageously  employed  at  any  one 
time,  with  present  buildings,  machinery,  and  capital,  438,229 ; 


THE  DISTRIBUTION  OF  WEALTH.  93 

aggregate  number  of  persons  employed  at  the  periods  of  greatest 
employment  of  the  several  industries,  301,159 ;  smallest  aggre- 
gate employment,  177,381 ;  number  of  salaried  persons,  9590  j 
salaries,  $10,846,367.  Capital  employed  consists  as  follows : 
Land,  $34,412,516;  buildings,  etc.,  $84,474,127;  machinery, 
$100,955,619;  implements  and  tools,  $14,298,711;  cash  and 
credit  capital,  $173,440,947;  credit  capital  furnished  by  part- 
ners or  stockholders,  $19,481,405;  bills  payable,  accounts  on 
long  time,  etc.,  $73,531,052 ;  total  capital,  $500,594,377. 


PROPORTION   OF   PRODUCT   TO   CAPITAL. 

Percent 

1865.  State  census 291 

1870.  United  States  census 239 

1875.  State  census 210 

1880.  United  States  census 208 

1885.  State  census 136 

1885.  State  census,  credit  capital  omitted      166 

COMPARISON  OF  WAGES  FIFTY  YEARS  AGO  AND  AT  THE  PRESENT 
TIME  IN  ENGLAND  (FROM  "MISCELLANEOUS  STATISTICS  OF  THE 
UNITED   kingdom"   AND   PORTER's   "  PROGRESS  OF  THE  NATION"). 

Occupation.  Place. 

Carpenters Manchester. 

"  Glasgow. 

Bricklayers     ....  Manchester.* 

"  Glasgow. 

Masons Staffordshire. 

"         Huddersfleld. 

Miners " 

Pattern  weavers    .    .  " 

"Wool  scourers    ...  " 

Mule  spinners    ...  " 

Weavers " 

"Warpers  and  beamers  " 

Winders  and  reelers  " 

Weavers  (men)  .    .    .  Bradford. 
Eeelers  and  warping  " 

Spinning  (children)  .  " 

*  1825.  t  Per  day. 


Wages 

Fifty  years  ago, 

Per  Week. 

Present  Time, 
Per  Week. 

Increas 
Per  cei 

24s. 

34s. 

42 

14s. 

26s. 

85 

24s. 

86s. 

50 

15s. 

27s. 

80 

24s. 

29s. 

lOd. 

24 

14s. 

28s. 

Sd. 

69 

2s. 

M.f 

4s.1 

70 

16s. 

25s. 

55 

17s. 

22s. 

30 

25s. 

30s. 

20 

12s. 

26s. 

115 

ITs. 

27s. 

58 

6s. 

lis. 

83 

8s. 

Sd. 

20s. 

6d. 

150 

7s. 

9d. 

15s. 

6d. 

100 

4s. 

M. 

lis. 

6d. 

IGO 

M 


THE  DISTRIBUTION   OP  WEALTH. 


COMPARISON  OP  seaman's  MONEY  WAGES  PER  MONTH  (iN  ENG- 
LAND) IN  1850  AND  THE  PRESENT  TIME  (FROM  "PROGRESS  OP 
MERCHANT   SHIPPING  RETURN"). 


1850, 
SaiUng. 

Bristol 465. 

Glasgow 455. 

Liverpool  (1) 50s. 

"         (2) 505. 

"         (3) 455. 

"         (4) 405. 

"         (5) 425. 

London     (1) 455. 

"         (2) 50s. 

"         (3) 455. 

"         (4) 45s. 

"         (5) 40s. 

"         (6) 405. 


Present  Time, 
Steam. 

755. 

705. 

69s.  5d. 

855. 

608. 

60s. 

605. 

75s. 

77s.  6c?. 

65s. 

705. 

67s.  6d. 

675.  6d. 


Increase  Rate, 
Per  cent. 

66 

56 


70 
83 
26 
40 
66 
66 
46 
66 
69 
69 


PRICES  OP  VARIOUS  ARTICLES   FIFTY  YEARS  AGO  AND   NOW. 


1839-40. 


Sugar  (per  cwt.) 

Cotton  cloth,  exported  (per  yard) 


Inferior  beasts  (per  eight  pounds) 
Second  class  "  " 

Third  class  "  " 

Inferior  sheep  "  " 

Second  class  "  " 

Large  hogs  "  " 


685.  Sd. 


1840. 
35.     U. 
3s.    6d. 
35.  Hid. 
3s.    6d. 
35.  10^ 
Ss.    sld. 


Present  Time. 
2l5.  9c?. 
3^. 


4s.  3|c?. 
4s.  9fc?. 
5s.  I^d. 
55.  7d. 
6s.  l\d. 
4s.  6d. 


The  three  foregoing  tables  are  quoted  from  "  Progress  of  the 
Working- Classes  of  the  Last  Half-Century,"  by  Eobert  Griffin, 
LL.D.,  president  of  the  British  Statistical  Society.  He  esti- 
mates that  the  rental  paid  by  workingmen  is  now  two  and  one- 
half  times  what  it  was  fifty  years  ago,  and  that  houses  have 
improved  in  corresponding  ratio.  The  prices  of  wheat  have 
ranged  as  follows  : 


1836.  The  highest  price  was 

1838.  "  "  "       " 

1839.  "  "  "       " 


36s.  per  quarter. 

78s.  4d.  " 

81s.  6d.  " 


THE  DISTRIBUTION  OF  WEALTH.  95 

1840.  The  highest  price  was 72s.  lOd.  per  quarter. 

1841.  "         "          "      "      76s.  Id.  " 

1847.    "         **          "      "      1025.  6d.  " 

1837  to  1846.  The  average  price  was    .   .  58s.  7c?.  " 

1872  to  1882.     "         "          "        "       .   .  48s.  9d.  " 

1862  to  1882.  The  highest  price  (1867)     .  70s.  6d.  « 

1862  to  1882.     "         "          "     (1868)     .  74s.  7<£.  " 

Of  late  years  the  price  has  been  both  low  and  steady.  During 
the  earlier  half  of  the  century  prices  were  subject  to  extreme 
fluctuations.  Fifty  years  ago  the  English  workingman  con- 
sumed but  little  meat.  Bacon  only  was  within  his  reach,  and 
not  much  of  that.  The  same  writer  estimates  the  reduction  in 
the  hours  of  labor  in  textile,  engineering,  and  building  trades  at 
twenty  per  cent. 

AGRICULTURAL  WAGES  IN  ENGLAND. 

"  On  the  whole,  the  agricultural  laborer,  at  any  rate  in  the 
south  of  England,  was  much  better  off  in  the  middle  of  the 
eighteenth  century  than  his  descendants  were  in  the  middle  of 
the  nineteenth.  At  the  latter  date  wages  were  actually  lower 
in  Suffolk,  Essex,  and  perhaps  part  of  Wilts,  than  they  were  at 
the  former;  in  Berks  they  were  exactly  the  same;  in  Norfolk, 
Bucks,  Gloucestershire,  and  South  Wilts  there  had  been  a  very 
trifling  rise :  with  the  exception  of  Sussex  and  Oxfordshire, 
there  was  no  country  south  of  the  Trent  in  which  they  had 
risen  more  than  one-fourth.  Meanwhile,  rent  and  most  neces- 
saries, except  bread,  had  increased  enormously  in  cost,  while 
most  of  the  laborer's  old  privileges  were  lost,  so  that  his  real 
wages  had  actually  diminished.  But  in  the  manufacturing  dis- 
tricts of  the  north  his  condition  had  improved.  While  nominal 
wages  in  the  south  had  risen,  on  the  average,  fourteen  per  cent., 
here  they  bad  risen,  on  the  average,  sixty-six  per  cent.  In  some 
districts  the  rise  had  been  as  great  as  two  hundred  per  cent.  In 
Arthur  Young's  time  the  agricultural  wages  of  Lancashire 
were  four  shillings  and  six  pence,  the  lowest  rate  in  England ; 
in  1821  they  had  risen  to  fourteen  shillings.  It  may  be  roughly 
said  that  the  relative  positions  of  the  laborer  north  and  south 
of  Trent  had  been  exactly  reversed  in  the  course  of  a  century. 

"  Turning  from  the  agricultural  wage-earners  to  those  engaged 


96  THE  DISTRIBUTION  OF  WEALTH. 

in  manufactures,  we  find  their  condition  at  this  period,  on  the 
whole,  much  inferior  to  what  it  is  now.  In  spite  of  the  widen- 
ing gulf  between  capitalist  and  laborer,  the  status  of  the  artisan 
has  distinctly  improved  since  Adam  Smith's  time.  His  nominal 
wages  have  doubled  or  trebled.  A  carpenter  then  earned  two 
shillings  and  six  pence  a  day ;  he  now  earns  five  shillings  and 
six  pence.  A  cotton -weaver  then  earned  five  shillings  a  week ; 
he  now  earns  twenty  shillings  ;  and  so  on. 

"  If  the  wages  have,  on  the  whole,  very  greatly  increased, 
there  were,  on  the  other  hand,  some  obvious  advantages  which 
the  artisan  possessed  in  those  days,  but  has  since  lost ;  for  the 
manufacturing  population  still  lived,  to  a  very  great  extent,  in 
the  country.  The  artisan  often  had  his  small  piece  of  land, 
which  supplied  him  with  wholesome  food  and  healthy  recrea- 
tion. His  wages  and  employment,  too,  were  regular.  He  was 
not  subject  to  the  uncertainties,  and  knew  nothing  of  the  fearful 
sufferings,  which  his  descendants  were  to  endure  from  commer- 
cial fluctuations,  especially  before  the  introduction  of  free  trade ; 
for  the  whole  inner  life  of  industry  was,  as  we  have  seeii,  en- 
tirely different  from  what  it  now  is.  The  relation  between 
workmen  and  employers  was  much  closer,  so  that  in  many  in- 
dustries they  were  not  two  classes,  but  one.  As  among  the 
agriculturalists,  the  farmer  and  laborer  lived  much  the  same 
life, — for  the  capitalist  farmers  as  a  class  were  not  yet  in  exist- 
ence, and  ate  at  the  same  board, — so  in  manufacturing  industries 
the  journeyman  was  often  on  his  way  to  become  a  master. 
The  distribution  of  wealth  was,  indeed,  in  all  respects  more 
equal.  Landed  property,  though  gradually  being  concentrated, 
was  still  in  a  far  larger  number  of  hands,  and  even  the  great 
landlords  possessed  nothing  like  their  present  riches.  They  had 
no  vast  mineral  wealth  nor  rapidly-developing  town  property. 
A  great  number  of  the  trading  industries,  too,  were  still  in  the 
hands  of  small  capitalists.  Great  trades  like  the  iron  trade,  re- 
quiring large  capital,  had  hardly  come  into  existence."  * 

Another  important  fact  not  to  be  overlooked  in  this  connec- 
tion, as  bearing  upon  the  relative  amount  of  the  actual  earn- 
ings of  labor,  is  that  in  the  eighteenth  century  the  production 

*  Industrial  Eevolution  of  the  Eighteenth  Century  in  England. 


THE  DISTRIBUTION  OF  WEALTH.  97 

of  fabrics,  clothing,  and  other  articles  in  the  family  of  the 
laborer  was  far  greater  than  in  the  nineteenth  century. 

On  the  other  hand,  the  laborers  of  the  nineteenth  century 
enjoy  many  advantages  in  the  way  of  public  schools,  postal 
service,  and  otherwise,  which  the  eighteenth  century  did  not 
afford. 

The  industrial  growth  of  England  was  attended  by  two 
notable  changes  in  the  condition  of  the  people.  The  first  was 
the  consolidation  of  lands  through  the  purchase  and  extinction 
of  small  holdings ;  the  second,  the  introduction  of  machinery. 
To  these  causes  must  be  chiefly  attributed  the  change  in  the 
condition  of  the  laboring-classes,  which  is  illustrated  in  the  fact 
that  the  poor-rate  gradually  increased  from  three  shillings  and 
seven  pence  per  head  in  1760  to  thirteen  shillings  and  three 
pence  per  head  in  1818,  the  highest  rate  ever  reached. 

In  1831  there  were  1,243,057  adult  males  employed  in  agri- 
culture in  Great  Britain ;  in  1841  there  were  1,207,989 ;  in  1851 
the  whole  number  of  persons  engaged  in  agriculture  was 
2,084,153;  in  1861,  2,010,454;  and  in  1871,  1,657,138. 

MONEY,    STATISTICS   OF. 

The  amount  of  gold  and  silver  necessary  for  use  as  money, 
or  for  the  purpose  of  facilitating  exchange,  is  not  an  absolute 
quantity  depending  on  the  value  of  these  metals  according  to 
present  ratios  of  value,  but  a  quantity  sufficient  to  admit  of 
division  into  pieces  of  sizes  convenient  for  handling  and  numer- 
ous enough,  when  distributed  among  the  people,  to  furnish 
measures  of  value  in  the  number  necessary  to  answer  the 
purposes  of  convenience  in  conducting  the  business  of  exchange. 

The  value  of  gold  and  silver  depends  upon  the  quantity  in 
existence.  If  the  present  quantity  of  gold  and  silver  in  the 
world  were  only  one-half  what  it  actually  is,  the  value  would 
be  twice  as  great,  except  for  the  fact  that  these  metals  are  used 
in  the  arts ;  and  it  may  be,  also,  that  the  greater  subdivision 
made  necessary  might  extend  somewhat  the  employment  of 
credit,  with  these  metals  as  a  basis.  But  it  may  be  laid  down 
as  a  general  proposition,  that  the  value  of  the  precious  metals 
increases  or  diminishes  in  inverse  ratio  as  the  quantity  increases 
or  diminishes. 

7 


98  THE  DISTEIBUTION   OF   WEALTH. 

The  principal  element  that  gives  value  to  these  metals  is  their 
scarcity  and  the  fact  that  the  amount  on  hand  can  be  increased 
but  slowly,  so  that  the  quantity,  as  compared  with  the  volume 
of  exchange,  remains  the  same  from  one  year  to  another,  and 
the  fluctuations  in  the  ratio,  through  the  course  of  a  decade  or 
a  century,  are  confined  within  a  narrow  margin. 

Nevertheless,  the  variation  in  the  value  of  these  metals 
through  long  periods  of  time  has  been  very  great;  and  the 
fluctuations  within  comparatively  short  periods  have,  in  a  few 
instances,  been  quite  marked.  It  is  estimated  that  between 
1800  and  1849  the  purchasing  power  of  gold,  as  measured  in 
the  ordinary  necessities  of  life,  increased  about  forty-five  per 
cent.,  and  between  1847  and  1858  the  depreciation  in  the  value 
of  gold,  resulting  from  greatly-increased  production,  was  not 
less  than  twenty  per  cent.  The  increase  in  the  product  of  silver 
within  recent  years  has  had  a  like  efi'ect  in  depreciating  the 
value  of  that  metal.  Except  for  the  demonetization  of  silver 
in  Europe  and  in  the  United  States,  the  depression  in  value  re- 
sulting from  the  increased  production  of  that  metal  would  have 
extended  to  gold  as  well,  and  the  two  metals  would  have  re- 
tained their  relative  values  as  before. 

The  relative  depreciation  in  the  value  of  silver  is  attributable 
altogether  to  demonetization  of  the  latter  metal.  The  effect  of 
demonetization  was,  therefore,  to  increase  the  value  of  money, 
and,  in  like  measure,  to  increase  the  amount  of  debts  as  meas- 
ured in  the  products  of  labor. 

From  this  demonetization  of  silver  great  advantage  resulted 
to  the  holders  of  public  securities  and  to  private  creditors  hold- 
ing paper  payable  several  years  later,  with  corresponding  loss 
to  debtors  and  to  the  people  who  are  taxed  to  pay  public 
securities. 

The  depreciation  in  the  value  of  money  resulting  from  in- 
creased production  is  a  risk  fairly  assumed  by  the  creditor. 
The  depreciation  in  the  values  of  other  property,  from  whatever 
cause,  is  something  which  the  government  has  never  attempted 
to  prevent,  by  increasing  the  amount  of  money  in  circulation, 
or  by  other  special  measure;  and  the  favoritism  shown  to 
creditors  is  an  injustice,  for  which  there  can  be  offered  no  valid 
excuse.     But,  under  the  plea  of  guarding  the  public  credit, 


THE  DISTRIBUTION  OF  WEALTH.  99 

legislation  has  often  favored  the  creditor  at  the  expense  of 
the  debtor. 

Prior  to  the  eighteenth  century  the  larger  proportion  of  coin 
in  use  in  England  and  America  and  throughout  the  world  was 
silver. 

From  1200  to  1420  the  amount  of  gold  coined  in  Great  Britain 
was  £35,000,  while  the  amount  of  silver  coined  was  £183,000 ; 
from  1420  to  1603  the  amount  of  gold  coined  was  £1,494,000, 
and  the  amount  of  silver  coined  was  £5,649,000 ;  from  1604  to 
1688  the  amount  of  gold  coined  was  £13,432,000,  and  the  amount 
of  silver  was  £17,421,000 ;  but  from  1689  to  1760  the  amount  of 
gold  coined  was  £26,058,000,  and  the  amount  of  silver  £8,239,- 
000;  from  1760  to  1880  the  amount  of  gold  coined  in  Great 
Britain  was  £369,670,000,  and  the  amount  of  silver  was  but 
£27,525,000. 

The  coinage  in  the  United  States  from  1793  to  1840  was, 
gold,  £32,000,000,  silver,  £11,100,000;  from  1840  to  1850,  gold, 
£19,800,000,  silver,  £4,500,000 ;  from  1850  to  1860,  gold,  £66,- 
000,000,  silver,  £9,300,000 ;  from  1860  to  1881,  gold,  £147,200,- 
000,  silver,  £37,100,000. 

The  following  table  shows  the  quantity  of  coin  in  the  world 
since  1600,  the  amount  of  commerce  and  the  ratio  of  coin  ta 
commerce  (foreign). 

^^*^-  ^^'^^  Commerce,  coin  fo^Commerce. 

1600 £130,000,000  £35,000,000               371 

1700 297,000,000  94,000,000               816 

1809 380,000,000  286,000,000               133 

1830 313,000,000  368,000,000                85 

1880 1,128,000,000  2,650,000,000                42 

AMOUNT   OF   COIN   IN   DIFFERENT    COUNTRIES,   RATIO   TO   COMMERCE, 
AND  AMOUNT   PER   INHABITANT. 

Yea,.      Country.  Gold.             Silver.             Total.      ^ha^lLnt.  CommeJJe. 

1881.  Great  Britain    .  .  £123,600,000  £19,300,000  £142,900,000      £4.  0.2               25 

1880.  France     .....  190,000,000  110,000,000        300,000.000        8.  0.2                90 

1880.  United  States    .  .  115,000,000        41,000,000        146,000,000        2.17.0               46 

The  paper  money  of  the  United  Kingdom  was  £42,000,000 ; 
that  of  France,  £100,000,000 ;  and  that  of  the  United  States, 
£144,000,000.    Amount  of  money  per  inhabitant  of  the  United 


100  THE  DISTRIBUTION   OF   WEALTH. 

Kingdom,  £5.6.0;  France,  £10.10.0;  United  States,  £5.15.0. 
The  banking  power  of  the  United  Kingdom  was  four  times  that 
of  France. 

The  extent  to  which  credits,  employed  through  the  agency  of 
banks,  have  taken  the  place  of  money  is  here  illustrated.  The 
amount  of  money  per  inhabitant  in  France  is  nearly  double 
what  it  is  in  the  United  Kingdom,  although  the  foreign  com- 
merce of  France  is  only  three-fifths  as  great  as  that  of  the 
United  Kingdom  of  England,  Scotland,  and  Ireland. 

The  amount  of  uncovered  (by  coin)  paper  money  in  1880  was, 
in  the  United  Kingdom,  £10,000,000;  France,  £13,000,000; 
Germany,  £20,000,000;  Eussia,  £88,000,000;  United  States, 
£81,000,000. 

At  the  close  of  the  Franco-Prussian  War,  Germany  exacted 
of  France  a  thousand  million  dollars  of  gold  indemnity ;  and  on 
the  9th  of  July,  1873,  gold  was,  by  law,  made  the  standard 
of  value  in  Germany.  Before  this  the  metallic  currency  of  Ger- 
many was  silver.  Denmark,  Korway,  Sweden,  and  the  Nether- 
lands, following  the  example  of  Germany,  changed  their  cur- 
rency to  gold  and  threw  their  silver  on  the  market.  Coinage 
was  restricted  in  Italy,  France,  Belgium,  Switzerland,  and 
Greece,  and  soon  thereafter  ceased  altogether ;  and  in  1873  the 
United  States  also  ceased  to  coin  silver,  and  made  the  gold 
dollar  the  sole  unit  of  value. 

In  England,  prior  to  1816,  the  unit  of  value,  the  English  pound, 
was  silver.  In  1816  gold  was  made  the  unit  of  value,  and  silver 
ceased  to  be  a  legal  tender  in  sums  over  forty  shillings. 

From  1873  to  1878  there  was  no  law  authorizing  the  coinage 
of  silver  dollars  in  the  United  States. 

Prior  to  1873  the  silver  dollar,  of  the  same  weight  and  fine- 
ness as  now,  was  a  full  legal  tender. 

The  ratio  in  coinage  between  gold  and  silver  was,  in  Europe, 
1.151 ;  in  the  United  States,  1.16. 

Prior  to  1873  silver  was  at  a  premium.  From  1873  to  1876 
the  price  of  silver  in  the  London  market  varied  as  much  as 
thirty-five  per  cent.,  and  on  the  19th  of  May,  1887,  it  fell  to 
eighty-three  cents  per  ounce. 

During  the  four  years  ending  June  30,  1865,  the  average  value 
of  the  silver  in  a  silver  dollar  is  officially  stated  as  about  three 


THE  DISTRIBUTION  OF   WEALTH.  101 

and  three-fourths  per  cent,  greater  than  the  value  of  the  gold  in 
a  gold  dollar. 

The  amount  of  silver  in  our  dollar  is  the  same  to-day  as  under 
the  first  coinage  act  of  1792 ;  but  the  allo}^  has  been  changed, 
so  that  the  dollar  contains,  since  1837,  three  and  one-half  grains 
less  copper  than  before  that  time. 

In  July,  1876,  our  silver  dollar,  as  a  commodity,  was  worth 
but  seventy-nine  and  one-fourth  cents;  in  1884  it  was  worth 
eighty-six  and  one-fourth  cents. 

From  1834  down  to  1873,  when  silver  coinage  was  stopped, 
silver,  being  at  a  premium,  went  abroad. 

Silver  is  the  coin  of  most  Eastern  countries. 

The  fall  in  the  price  of  silver  enabled  England  to  purchase  in 
India,  with  thirty-two  cents,  an  amount  of  wheat  that  before  the 
depreciation  cost  forty-eight  cents.  The  effect  was  to  stimulate 
imports  from  India  and  reduce  the  demand  for  American  wheat. 

The  proportion  of  silver  money  to  the  amount  of  gold  money 
in  the  world  is  as  9 :  11 ;  or,  for  every  fifty-four  cents  in  gold 
there  are  forty-six  cents  in  silver. 

.The  amount  of  silver  coined  in  the  United  States  since  1878, 
and  prior  to  1889,  is  $308,780,157. 

The  law  enacted  in  1878  authorized  the  Secretary  of  the 
Treasury  to  purchase  silver  bullion  on  the  market,  and  provided 
for  the  coinage  of  an  amount  not  exceeding  four  million  dollars 
per  month. 

In  1792,  silver  dollars  of  four  hundred  and  sixteen  grains 
were  authorized. 

In  1793,  Spanish  milled  dollars  and  parts  of  dollars  were  made 
a  legal  tender,  and  other  foreign  coins  were  made  a  legal  tender 
until  the  expiration  of  three  years  after  the  establishment  of  the 
United  States  Mint. 

In  1806,  foreign  coins  were  made  a  legal  tender  at  certain 
defined  rates.    Limitation  in  act  of  1793  suspended  three  years. 

In  1834,  foreign  silver  coins  were  made  current  at  named  rates. 

In  1837,  silver  dollars  of  four  hundred  and  twelve  and  one- 
half  grains  were  authorized. 

In  1851,  three-cent  pieces  were  authorized  and  made  legal 
tender  for  amounts  not  exceeding  thirty  cents.  They  were 
three-fourths  silver  and  one-fourth  copper. 


102  THE  DISTKIBUTION   OF  WEALTH. 

In  1853,  half-dollars  and  other  subsidiary  coins  were  made 
legal  tender  to  amounts  not  exceeding  five  dollars. 

In  1857  it  was  enacted  that  no  foreign  gold  or  silver  coin 
should  be  a  legal  tender. 

The  coinage  act  of  1873  authorized  the  deposit  of  silver  bullion 
for  the  coinage  of  trade  dollars  of  four  hundred  and  twenty- 
grains,  and  stamped  bars,  but  no  deposit  was  permitted  for  any- 
other  purpose.  It  provided  for  the  purchase  of  silver  bullion  for 
coinage  of  fifty-cent,  twenty-five-cent,  and  ten-cent  pieces,  and 
made  silver  coin  a  legal  tender  to  the  amount  of  five  dollars.* 

The  act  of  July,  1876,  authorized  the  Secretary  of  the  Treas- 
ury to  issue  the  silver  coin  in  the  treasury  in  exchange  for  legal- 
tender  notes  to  the  amount  of  not  exceeding  ten  million  dollars, 
provided  that  trade  dollars  should  not  thereafter  be  a  legal 
tender,  and  authorized  the  Secretary  to  limit  the  coinage 
thereof  to  the  export  demand. 

The  act  of  1878  made  silver  dollars  of  four  hundred  and  twelve 
and  one-half  grains  a  legal  tender,  and  authorized  the  Secretary 
of  the  Treasury  to  purchase  silver  bullion  for  coinage  at  a  rate 
not  exceeding  four  million  dollars  per  month.  It  provided  that 
silver  should  not  be  used  in  payment  of  gold  certificates. 

An  act  passed  by  the  present  Congress  (1890)  provides  (1) 
that  the  Secretary  of  the  Treasury  shall  from  time  to  time  pur- 
chase silver  bullion  to  the  aggregate  of  four  million  five  hundred 
thousand  ounces  per  month,  or  so  much  thereof  as  may  be 
offered  each  month  at  the  market  price  thereof  at  not  exceeding 
one  dollar  for  371.25  grains  of  pure  silver ;  (2)  that  payment  for 
the  bullion  purchased  shall  be  made  in  treasury  notes,  which  are 
made  a  legal  tender  for  all  debts  both  public  and  private,  ex- 
cept where  otherwise  expressly  stipulated  by  contract,  and  are 
redeemable  in  gold  or  silver  coin  at  the  option  of  the  Secretary 
of  the  Treasury,  it  being  declared  the  policy  of  the  United 
States  to  maintain  gold  and  silver  at  a  parity  with  each  other 
in  the  ratio  fixed  by  law ;  (3)  that  the  Secretary  of  the  Treas- 

*  The  coinage  of  silver  dollars  had  ceased  prior  to  the  repeal  of  the  law 
authorizing  their  coinage  in  1873,  owing  to  the  fact  that  silver  was  at  a 
premium  over  gold.  The  higher  value  of  silver  was  caused  hy  the  foreign 
demand.  Silver  was  rated  at  a  relatively  higher  value  in  the  money  of 
Europe,  and  was  the  standard  coin  in  the  East. 


THE  DISTRIBUTION  OF  WEALTH.  103 

uiy  shall  each  month  coin  two  million  ounces  of  silver  bullion 
into  standard  silver  dollars  until  July  1,  1891,  and  after  that 
time  as  much  as  may  be  necessary  for  the  redemption  of  the 
treasury  notes  issued  under  this  act;  (4)  the  treasury  notes 
provided  for,  after  being  redeemed,  may  be  reissued,  but  the 
amount  at  any  time  outstanding  is  limited  to  the  cost  of  the 
silver  bullion  purchased. 

The  purchase  of  silver  provided  for  by  this  act  is  sufficient  to 
absorb  the  silver  product  of  the  United  States  at  present  avail- 
able for  coinage.  The  value  of  silver  is  not  forced  to  a  parity 
with  gold  in  the  home  market  by  an  arbitrary  act  of  govern- 
ment, but  its  value  is  raised  to  the  extent  of  the  effect  of  the 
increased  demand.  The  treasury  notes  issued,  being  made  re- 
deemable in  gold  or  silver  at  the  option  of  the  Secretary  of  the 
Treasury,  and  being  based  on  the  gold  value  of  silver,  will 
naturally  remain  at  a  parity  with  gold.  While  an  increase  in 
the  volume  of  currency,  substantially  equivalent  to  that  which 
would  have  been  obtained  by  free  coinage,  is  thus  secured,  it  is 
sought  to  avoid  the  effect  of  an  attempt  to  maintain  the  circu- 
lation of  coin  at  a  higher  relative  value  than  that  fixed  by  the 
markets  of  the  world,  which  in  the  past  has  been  exemplified  in 
the  hoarding  and  the  exportation  of  the  dearer  metal. 

During  the  war  which  began  in  1861  and  ended  in  1865, 
United  States  bonds  were  sold  on  the  market  to  the  amount  of 
$1,163,769,611.89.  Legal  tender  notes  were  received  for  the 
greater  portion  of  this  amount.  On  the  third  day  of  October, 
1865,  the  total  debt  of  the  United  States  was  $2,808,549,437.75, 
embracing  bonds,  compound  interest  notes,  treasury  notes,  cer- 
tificates of  indebtedness,  temporary  loans,  United  States  notes, 
and  fractional  currency.  This  debt  was  contracted  on  the 
basis  of  the  value  of  the  paper  currency.  The  total  circula- 
tion at  that  date,  embracing  all  securities  used  as  money,  was 
61,894,779,825.66. 

The  process  of  contracting  the  currency  began  during  the 
year  following  the  close  of  the  war,  and  by  .Tnly,  1870,  the  cir- 
culation had  been  reduced  to  $747,000,000.  The  consequent  ap- 
preciation of  credits  and  depreciation  of  property  values  resulted 
in  the  financial  crash  of  1873. 

The  war  was  a  source  of  great  profit  to  capitalists.    The  losses^ 


104 


THE  DISTEIBUTION  OF  WEALTH. 


have  been  borne  by  the  workingmen.  A  financial  policy  may  be 
altogether  sound  from  the  stand-point  of  the  money-lender,  and 
yet  be  but  robbery  disguised. 

The  policy  of  the  government  in  financial  matters  is  dictated 
by  the  necessity  of  commanding  the  support  of  the  money 
power,  which  is  stronger  than  the  people  and  always  on  the 
alert.  The  remedy  will  be  found  in  that  improved  intelligence 
of  the  people  which  shall  extricate  the  government  from  such 
necessity. 

The  following  table  exhibits  the  amount  of  the  outstanding 
currency  of  the  United  States  and  of  national  banks  on  Janu- 
ary 1  of  each  year,  and  the  estimated  amount  of  coin  in  circu- 
lation and  in  the  treasury  for  the  years  designated.  The  first 
column,  United  States  issues,  embraces  legal  tender  notes,  old 
demand  notes,  and  fractional  currency.  The  amount  of  demand 
notes  August  31,  1865,  was  $402,965.  This  amount  was  reduced 
each  year.  The  amount  of  fractional  currency  in  1874  reached 
648,544,792,  the  largest  amount  outstanding  at  any  one  time. 


Year. 

1865  . 

1866  . 

1867  . 

1868  . 

1869  . 

1870  . 

1871  . 

1872  . 

1873  . 

1874  . 

1875  . 

1876  . 

1877  . 

1878  . 

1879  . 

1880  . 

1881  . 

1882  . 

1883  . 

1884  . 

1885  . 


United  States 
Issue. 

$459,201,619 

452,232,409 

409,230,614 

387,756,710 

390,343,813 

395,875,762 

396,096,175 

398,360,678 

404,364,355 

427,026,131 

428,462,917 

416,053,934 

392,468,752 

867,771,417 

362,851,210 

362,406,670 

362,265,225 

362,192,797 

362,138,319 


National  Bank 


Ck)in. 


$176,213,955 
236,636,098 
298,588,419 
299,846,206 
299,747,569 
299,629,322 
306,307,672 
328,465,431 
344,582,812 
350,848,236 
354,128,250 
346,479,756 
321,595,606 
321,672,505 
323,791,674 
342,387,336 
344,355,203 
362,421,988 
361,882,791 


$40,000,000 


140,000,000 


398,541,683 

502,981,634* 

732,398,542* 

756,100,686* 

824,672,186* 

861,347,311* 

894,386,614* 


Total  Currency. 
$635,415,574 
688,858,507 
707,819,033 
687,602,916 
690,091,382 
695,504,087 
702,403,847 
726,836,099 
748,947,167 
777,874,367 
782,591,165 
762,523,690 
714,064,358 
689,443,922 
686,642,884 
704,804,006 
706,620,428 
724,614,785 
724,021,110 


*  November  1. 


THE  DISTRIBUTION  OF  WEALTH.  105 

Since  the  above  figures  include  amounts  in  the  United  States 
Treasury  at  the  dates  named,  in  order  to  ascertain  the  actual 
circulation  the  amount  in  the  United  States  Treasury  should  be 
deducted.  On  October  1,  1883,  the  amount  of  bullion,  coin,  and 
currency  in  the  treasury  not  represented  by  outstanding  certi- 
ficates was  $311,590,769,  and  on  October  1,  1887,  the  amount  in 
the  treasury  was  $469,977,945.  The  money  in  the  hands  of  the 
people,  not  including  that  in  banks,  was,  on  November  1,  1881, 
$918,048,519,  and  on  November  1,  1885,  $829,792,777. 

From  the  above  table  alone,  it  would  appear  that  there  had 
been  no  contraction  of  the  circulation  from  1865  to  1879,  but, 
on  the  other  hand,  that  there  had  been  an  increase.  Besides 
United  States  legal  tender  notes  there  were  issued,  prior  to 

1865,  compound  interest  notes,  one -year,  and  two-year  notes  of 
1863,  and  two-year  coupon  notes  of  1863,  all  of  which  were  a 
legal  tender  and  intended  to  circulate  as  money.  Of  govern- 
ment legal  tender  currency  there  was   outstanding,  June  30, 

1866,  $608,870,825.  But,  in  addition,  there  were  other  issues, 
not  designed  to  circulate  as  money,  but  which,  owing  to  early 
maturity  and  the  small  denominations  in  which  they  were 
issued,  were  extensively  used  as  currency.  Of  securities  of  this 
class,  there  were  outstanding,  September  1,  1865,  as  follows : 

Temporary  loan  certificates $107,148,713 

Certificates  of  indebtedness 85,093,000 

Thi-ee-year  treasury  notes 830,000,000 

State  bank  notes 78,867,575 

Total $1,101,109,288 

Securities  of  the  classes  here  enumerated  did  not  enter  into 
circulation  with  the  same  freedom  as  the  ordinary  legal  tender 
note ;  nevertheless  they  were  extensively  employed  as  money, 
and  tended  greatly  to  the  inflation  of  values.  Counting  these 
securities  as  money,  the  total  circulation  September  1,  1865,  was 
$1,996,678,770. 

Prior  to  December  1,  1873,  the  securities  here  enumerated 
were  cancelled,  and  in  their  place  were  issued  long-time  interest- 
bearing  bonds;  and  on  the  Ist  of  December,  1873,  the  circu- 
lating medium,  exclusive  of  coin,  was  as  follows : 


106  THE  DISTRIBUTION  OP  WEALTH. 

United  States  notes $367,001,685 

Fractional  currency 48,000,000 

Certificates  of  indebtedness  (bearing  interest)  .   .  678,000 

National  bank  currency 350,000,000 

Total  December  1, 1873 $765,679,685 

Thus  it  appears  that  the  amount  of  the  evidences  of  indebted- 
ness of  the  United  States  government  used  as  a  circulating 
medium  was  contracted  over  $1,200,000  in  eight  years.  Owing 
to  the  fact  that  many  of  these  securities  were  held  as  invest- 
ments, and  did  not  in  fact  circulate  as  money,  the  degree  of 
contraction  was  much  less  than  the  amount  measured,  as  here 
shown,  by  the  reduction  in  volume.  But,  nevertheless,  the 
contraction  was  sufficient  to  produce  the  panic  of  1873  and  the 
great  depreciation  in  values  of  all  classes  of  property  which 
began  with  the  reduction  of  the  circulating  medium,  or  as  soon 
thereafter  as  financial  pressure  began  to  be  seriously  felt. 

When  there  is  a  contraction  of  the  currency  there  is  a  ten- 
dency to  supply  its  place  by  the  employment  of  credit,  and 
values  for  a  time  are  maintained.  When  the  pressure  con- 
tinues, prices  go  down  and  credit  is  withdrawn,  a  financial  crisis 
is  brought  on,  and  there  comes  a  forced  readjustment  of  values. 

The  contraction  in  values  of  farm  products  resulting  from  the 
contraction  of  the  currency  is  shown  by  a  comparison  of  the 
amount  and  value  of  the  cereals  grown  in  1867  and  1868,  with 
the  amount  and  value  of  cereals  grown  in  1880,  1881,  and  1882. 

Year.     No.  of  Bushels.  Value. 

1867.  1,339,729,400 $1,284,037,300 

1868.  1,450,789,000 1,110,500,538 

1880.  2,718,193,501 1,361,497,704 

1881.  2,066,029,570 1,470,957,200 

1882.  2,829,319,089 1,280,765,927 

Agricultural  exports  in  1867  were  $330,413,246,  and  in  1880, 
$823,846,353. 

The  increase  in  population  from  1867  to  1880  was  about  forty 
per  cent. 

The  great  reduction  in  price  of  agricultural  products  must 
be  attributed  in  part  to  the  increase  of  the  product  per  capita, 


THE  DISTRIBUTION  OF  WEALTH.  107 

but  it  was  to  a  great  extent  the  result  of  the  contraction  of  the 
currency. 

FLUCTUATIONS   IN   VALUES. 

The  following  tables  show  the  annual  production  of  wheat 
and  corn  in  the  United  States  during  a  period  of  twenty  years. 
The  value  of  each  year's  product  is  given,  and  the  average  farm 
price  per  bushel.  The  population  also  is  shown,  and  the  number 
of  cattle  and  hogs  at  certain  periods.  The  number  of  miles  of 
railway  built  each  year,  the  product  of  pig-iron  and  the  prices 
thereof,  the  value  of  exports  of  meat  and  dairy  products,  bread- 
stuffs,  wheat,  and  flour  are  exhibited.  The  gold  value  of  cur- 
rency and  the  cotton  product  and  prices,  and  the  wheat-  and 
rye-crops  of  the  principal  countries  of  Europe  and  the  imports 
from  India  to  Great  Britain  for  a  series  of  years  are  shown. 
The  values  of  exports  and  imports  are  measured  in  gold.  The 
statistics  of  cattle  and  hogs  are  given  for  December  of  the  year 
designated,  or  for  January  of  the  following  year,  so  that  they 
represent  the  matured  product  of  the  corn-crop  of  the  year 
designated.  To  ascertain  the  amount  of  the  product  of  any 
year  exported,  reference  must  be  made  to  the  year  following. 
The  fiscal  year  ends  June  30. 

The  low  prices  which  prevailed  from  1874  to  1879  were  the 
result  of  the  panic  of  1873  and  the  industrial  depression  which 
followed  and  continued  until  the  business  of  the  country  had 
readjusted  itself  to  the  new  conditions.  The  resumption  of 
business  activity  is  marked  by  the  increase  in  miles  of  railway 
constructed  and  the  production  of  pig-iron.  During  the  first 
half  of  the  decade  beginning  in  1880  prices  advanced,  but  during 
the  latter  half  the  excess  of  the  agricultural  product  broke 
down  prices  in  that  department  of  industry,  so  that  the  per 
capita  product  to  each  agricultural  worker,  after  deducting  seed 
and  food  of  work-animals,  is  only  eighty-two  per  cent,  of  the 
average  per  capita  product  for  the  years  1870  to  1874,  inclusive, 
if  we  accept  the  value  of  the  wheat  and  corn  crops  as  a  basis  of. 
estimate. 

While  the  reduction  in  the  per  capita  product  of  agriculture 
was  great,  the  indebtedness  of  the  farmer  had  greatly  increased. 
The  immense  amount  of  money  borrowed  by  farmers  and  in- 
vested in  agriculture  resulted  in  an  increase  of  the  quantity  of 


108  THE   DISTRIBUTION   OF  WEALTH. 

product;  but  the  effect  was  to  reduce  values,  so  tliat  these  in- 
vestments not  only  brought  no  returns  to  the  farmer,  but  caused 
a  reduction  of  the  farmer's  income  while  adding  to  his  expen- 
diture. Besides,  the  fact  must  not  be  overlooked  that  the  great 
increase  of  product  was  not  distributed  among  the  workers, 
being  largely  the  result  of  extensive  farming  in  the  Western 
States  and  the  cattle  industry  in  the  Territories,  the  per  capita 
increase  in  quantity  east  of  the  Mississippi  being  but  small.* 

It  will  be  observed  that  the  fluctuations  in  prices  of  wheat 
depend  in  part  upon  conditions  which  control  the  European 
market. 

Europe  requires,  on  an  average,  about  140,000,000  bushels  of 
foreign  grain;  yet  in  1881  there  were  322,000,000  bushels  to 
cover  this  demand,  186,000,000  bushels  being  from  the  United 
States  alone. 

From  1876  to  1879  the  crops  of  Great  Britain  were  a  succes- 
sion of  failures,  and  Germany,  Austria,  Hungary,  and  other 
European  countries  had  short  crops  in  1879. 

Prices  of  agricultural  products  in  Europe  have  suffered  from 
foreign  competition  to  such  degree  as  to  greatly  depress  that 
industry  and  lead  to  general  embarrassment. 

In  England  the  price  of  hogs  has  fallen  from  forty-one  cents 
per  pound  in  1868  to  twenty-one  and  a  half  cents  in  1888 ;  the 
production  of  wool  from  166,000,000  pounds  in  1868  to  134,000,- 
000  in  1888 ;  the  area  of  grain  culture  is  diminishing,  and  the 
rental  value  of  lands  has  fallen  to  about  one-half  of  former  rates. 
Agricultural  values  throughout  Europe  have  gone  down  as  for- 
eign competition  increased. 

The  fluctuations  in  railway  construction,  and  in  the  manufac- 
ture of  iron,  exhibited  in  this  table,  indicate  the  large  numbers 
of  workers  who  are  from  time  to  time  thrown  out  of  employ- 
ment by  the  partial  suspension  of  these  industries,  creating 
irregular  and  unhealthy  competition  in  the  labor  market,  re- 
ducing consumption  and  impairing  values. 

*  In  1889,  Kansas  alone  produced  on&-ninth  of  the  total  product  of  wheat, 
oats,  and  corn;  and  the  wheat-crop  of  Dakota  increased  from  2,800,000 
bushels  in  1880  to  41,600,000  in  1889.  In  1887  it  was  62,500,000  bushels. 
The  com-crop  of  Kansas  and  Nebraska  in  1889  was  over  390,000,000  bushels, 
against  165,700,000  bushels  in  1880. 


THE  DISTRIBUTION  OP  WEALTH. 


109 


OOOOOOQOQDOOQOQOi 
OOOOQOOOQOOOOOOOI 


OOOOQOOOOOOOOOOOOOOOQOOO 


Population. 


(0»-l»-l|-l»->r-'l— >H-'h^M>»->l-^l— 'I-*!-'  t— > 


OOOtOSOOOCni-'COi-'OiOOrfi.OOtOCnOO 

Vj  "h-*  ">^ "L- "en  lr>  O  "o  "rfi.  "bi  1>5  Oi  00  O  ~H-i  "io 

OOii-i05000JC;iOS>*».>-'OOQO-<ICOGOrfi. 


O  «D 


Oi  05  — 1  o  o»  O  Oi 

rfi»-  ^4  Ox  o  o  o  o 
CO  Oi  o  o  o  o  o 


Bushels  of 
Corn  grown. 


Oi  Oi  Oi  "-^  "^  Oi  Oi 

CO  t*i>.  Ox  00  oi  ~a  Ox 

--1  CO  Oi  Oi  oo  t-»  -<i 
^  ^  J"*  J^  J^  J**"  J"* 

05  Ol  t^  <— '  I— '  *^  00 
CO  Oi  00  ~4  -J  «0  ^ 
O  O  Ox  Ox  o  o«o 


Jo 

•-•"bi 
ox  >J^ 
CO  CO 

OxO 


-4  Ox 
0\px 

h-*  Ox 
t-'  CO 

oo 


Ox  rf^ 
Crx  rf>. 

rf^oo 

oo  to 
oo 


CO  ^5 

ox  00 

"►-»lo' 


to  CD 

o  o 
o  o 


Oi  Oi 

px  00 
0*00 
CO  CO 
OxO 


Value. 


s 


Ox^bOrfi>.QOCOOOrfi.«o 


COi-»tf».OiOO-»rfk.rfi.OiOiOxOOOO 


Average  price 
per  bushel, 
local  market. 


oxco»*>.>^»^cototocotototo 

OQOCOOxtOOiQOCOOOO*>>CO 
j^  _co  po  _co  _p  Jf».  JO  Js5  ^  ^►-' JO  JD 

"h-«  "to  ^  ">f».  "h-i  "^  ^  "h-i  T-i  "to  ^  ~^ 
OiOOrf>.OObOCDOxCOOOxeOtO 
pxJ3jO_COJO  rfi.  OiJ^i  tOjti>-j<IJO 

'Ip>.'o'bo"H-''rfi.">-i  Ox1d^^">-'">*4' 
«0C005C0O*>.QOOOOO 
OOOO-JOOiOOOOOO 


to  to 

CO  »-' 
ox  to 


Bushels  of 
Wheat  grown. 


CO  CO 

J^OO 
^px 

1^"tO 

CD  Hi. 
t-"  00 

"^O 

O  CO 
^O 


CO  CO 

1-1  H_» 

p  *- 

Oi"bO 

►-»  to 

JOJ3i 

"to"© 

Oi  to 

OO 


to  CO 

-^  CO 

"co"bo 

to  Oi 

"co"to 

CO  Oi 

oo 


CO  h^ 

00  t*>. 
CO  >*». 


to   H-" 

~a  to 

to  ox 


rfi.  »|i.  l4i^  CO  CO 
Ox  ~J  CO  to  CO 
_OijJikj?sj3i  »{^ 

"bo'to'co'co'oi 

00  O  Oi  rf!w  CO 
<^^  00J3ipx 

^  oo'V~>t».~^ 
to  Ox  Oi  to  ~a 

-3  O  CO  rfi.  CO 


CO  to  to 

SCO  CO 

'to'bx"^-' 

Ox  00  O 

oo~co"oo 

O  CO  CO 
O  O  Ox 


CO  CO  to 

to  i-'CO 
"bx1-*~I(». 

CO  oo  1-' 
"00~CO  00 

o  -a  to 

Ox  ox  O 


to  rf». 
)«>•  to 

Oxj-i 

00  "^ 

Oi  CD 

Ox  Oi 

rfi.  Oi 
Ox  O 


Value. 


O  CO  00  CO  M  ox  I 


Average  price 

per  bushel, 

local  market. 


no 


THE  DISTEIBUTION  OF  WEALTH. 


•asrpnBqojaH 
JO  s^6dxa  ons3uio(i 


Oi  CO 
O  t- 

CO   T-l 


00  t- 

OS  cc 
CO  '«*< 


OJr-iriHOOOCOOOO 

'  co~oo'~o'~crc^'~oo'~o'«f 

C0C0O5CO(NC0'^'«Ji 
O^-'lJ^OO  O^t~-_«5^CO  05_ 

o"  oTtjT  c£^(^^  o'ocf  co" 

OCOt-HCOOQOOSC^ 


■^  CO  CO 

05^t-^CD_ 

(M  CO  (M 
CO  CO  '^ 

CO  CO  O 

00  t-00 


c^  CO  OS ' 

lO  -rti  (N  I 
00^  OS  o 

CO  00  «o 
OS__CO^OS 

(M  (M  CO 
t- t-  CO 


OS  (M  (>J 
-M  CO  00 
O  00^(N_ 

co^co"©" 
O  00  CO 
t^co  t- 


•uo!^  lod  ani^A  oSbjoav 


(MOCOt^C^kOuDOOCOOvOrHt^COOOOtN 


■apBTn  uoJi-Si<i  JO  suox 


.O0000Q0C0i-iC0>Or-i»O-Tt<T*(MC^C0CS00 

OO^^t^i— lOOCOODCOt^i— iCOC^t^i— iO(M 

.  0,'^'^<^^^"^"3,<M^'O^CO^QO  CS>  lO  i-H  OS  CO  00  CO 

ic"  i-T  TjT  ocT  oT  co"  co~ -"ir  t-T  cT  o"  r-T  od"  co"  oT  oT  o* 

•COrHiOCOOOCOOSi-Ht-t—  OSrt^t— -^OOCMCO 
00  OS  00^00  ?0_C^I  OC0u:)O<MC0i-lr-ii0i0C0 

*  rH"rH"c^<rf  c^(rf  cTcq'c^'' co'TirTir»r5'xo'"i^''-«irccr 


•Jiniq  ifBAvirey  jo  saniv 


OOOSOO«>-t^i-HC<JOOSCDCO«OOOi-tiO 
Tjtt-.l-t-.OSTHi-lr-IOO<N'<Kt^OSCO'*(?q   _ 
■^  O  CO^  00  O^  1-H^  l>^  l>^  C^  CD^  t-^  00  1^  »o  r-^  00_  co^ 

<^^co't-^«5~'^"<^^rH'<^^c^c4'■^«£fo^T-^cc^oo'co"c^1-^oo'^cc^ 


•aniBA  8SBI8AV 


•b3oh  jo  laqmtix 


OOQ                     O  CO  CO 

lO  O O  .  00  OS 

t-^t-T r-T  •  o'cT 

i-HvO. 00  .t^O 

CO^Tjl^                        co^  <^^<^ 

^  Oi  ''''''''      '  t^  •  CO  ■^ 


CO  CO  (MO 

CO  "^  .  OS  00 

00_O  *^*^ 

T— I  OS  .  o  o 

CO  O  CO  CO 


'oS 


•aniBA  a3»i8Av 


CO  rH  i-H  CO  lO  00  Tj*  O -^  OS  O  CO  OS  O  (M   .  t-   .  OS  lO   . 
00  00  CO  O  r-J  CO.O  f-HrHCO»-JC00000»O    rH    "^^O 

o  <H  OS  o  OS  00  OS  t-^  t~^  i6  CD  t-^  OS  1-5  CO    •  1-5    •  os  t^    • 

(M  (N  i-l  C^  i-H  rH  rH  rl  i-l  tH  i-H  i-l  i-H(N  (M        C<l        rH  r-l 
€& 

00  O OS      .t^O      . '^      .  lO  T-i  (M 

"^^"^  CO^       Cl^^       C^^       *^"^^°°, 

c<rc4" oT  '  ccTco"  'id"  ' r-ToToT 

OS  1-1 00         "*  Tt<         t-      .  rH  CO  Tji 

T-Tco" CO    •  00  oT  •  i-T   •  co'io'co' 

i-t  i-i  sq      c<j  c^       CO       CO  CO  CO 

t~Or-((MCO'!t<»OCOt^OOOSOi-l(MCO"^lOCOt>-OOOS 

COt^-t^t^t-t^t^t^t^t^t^OOOOOOOOOOOOOOOOOOOO 
OOOOOOOOOOOOOOOOOOOOOOOOOOOOCOCOOOOOQOOOOO 


•SAvoo-qonw  wjqi 
Jdq)o  9Xi%vo  JO  jaqumN 


THE  DISTRIBUTION  OF   WEALTH. 


Ill 


OoSgO  000000000000  OOQO  00  QOQO  00  00  0000  SoO  00 
O0O0OOO0O0O00OO0O0Qp^l"-I'^~J"~J— J~J^J-<l^40i 
«OOO^OSOxtf».COtC»l-»0«000~^OSCn4».COlC>t-'0-4 

1 

• 

1 

•  P  0  0  to  CO  H-  00  ^  rfik  CO  to  bO  <X5  00  00  00  05  >fk.  CO  to 
j&JO^tO^^^CO  00  pjsSj-JjDjOJ-'^Kji.pi  OJJ&.Cn  O^H-  OJ 

•  "^"^"b^  colss'co  «oV'^l5"co"Hjlo~^"rf^  ot'to^co'^'bs 
.    »♦».  ^  00  CO  00  00  CO  rfi.  *>.  to  4^  0  to  to  >*^  0  0  p  1— 0 

^  Jt^  _Q0  jD  rf^ 5^  Jti".  «3  ps  JD  JO j:i  j<l  JTi -J _tO  JO  ^  j-I  ^ 

•  "bs"k)'col»  co"«o'^  0^l5"^"*>>~H-"to"^"^  oi'bx'to"^ 

OH-t-iCOOtOOOt-'COCDi-'H-'OtcnpH-oOJCO-:! 

•  o^  0  •-* -^  «o  to  05  CO  to  to  CO  oi  rfk.  en  >&. -4  CO  o»  00  0 

Meats,  Dalrv  Products, 
Cattle,   Sheep,    and 
Hogs  exported. 

i 

HJ  i_i  »_.  I_»  t-i  10  t-t  to  to  to  t-«  l-»  t-' h-*  i-i                          «9 

•  bO  Oi  to  01  OS  0  00  «a  00  I-' 00  l-»  CO  l-i  OS  i^5  00  ^  ^  >*i. 
j<J  JSx  j:n  JS  JO _00  JO  JD  j»  JD  ^H- j^  j-»  J— w  ^  _4i.  JO  JO  J-» 

'>-' "^  Ix)  "m  ~bt  "0  ^  "co  "o  "co  "h-i  ~bo  "n- 1»i.  "t-i  "^ 'ot  ~M  1^ 

.      CD  OS  rf».  ^  »*:>.  >*».  ^  CO  CO  en -J  0  00  CtX>  *.  00  00  en  00 
J-'J)OOSpjf>'POJOJ3S5nj<l  OSJ-'OOpO  03  0S  H-poo 

*  "bsl»  sn"bo^  oola^  ox'bo'b^ljo'hf^'btTo  ooT-»lo'>--'"«o~^ 

BreadHstuflfe  exported. 

I 

rf».  OS  0  en  00 -?  0  ?0  en  en  to -a  M!>>  en co  i-» 

P5nj-«j-4jfi.p_0SJ5xp^C0jOJ0pp»                              jfi.^ 

'rfi.^"co"^~bs~co"co^"cnlo~coVcol3) ^~<o 

h-' 00 -4  en  en  »*».  00  ^  OS  en  en  0  to -<i .    .     .     .          0  4^. 
j/^_p^^zatoo^_^cntsps^o\zo               '    •   jt».p 
l--«lo"«o1o'^"olio'bD~rf^"^"co"co"bs'H-i lolx> 

tOOSrfa^Oi— •<-»tOO^I'X)COOSh- 'to                                 PO 

CO  H-»  CD  «o  rfk.  to  00  to -a  en  OS  H-' t-i  fco os  co 

* 

Bushels  of  Wheat  ex- 
ported. 

o 

•  h-«  h-*  00  0  «op  rf^j<i  OS  j^T^oo^o^ CO  to 

•  "o'bx^HJ  os"hj"to~'H-i'^"o"bs~cD~co~co "bs'o 

osH-i-arf^enocoot— 'to^it<5«-co                        en^:i 

•  i:^  i^  rf!^  H- OS  OS  0  >*>-•-' i-i  en  p  t-i                          tt^  to 
.     Hi-CD  H*rf».0000«0  f^OPO t- CO 

* 

Barrels  of  Flour  ex- 
ported. 

03 

Gold  value  of  «100  in 
Currency  on  January 
1  of  each  year. 

f 

j-»  j«i p  p  crt  en p  _cn  p  px  j5i  jt>.  jt». _rf». ^co  j^ ^  JO  j^ ^co  JO 
"h-*  "hj  ~b<  "bt  "bs  <i  lo  V  Ox  "^  Id  7x)  1ti>.'bs  00  "^  "0  "co  "co  "h-i  1^ 

cDcDOsto©Otooococoento>^tocococncococo~4 
oo*.totiifescnoo*.tococoostooocoooocnh-'>»i^-j 
OOCocni-»fcOrf^enco-4i-'cncooo>-'00ooi-'~aosrf». 

Bales  of  Cotton  pro- 
duced. 

Value  of  Cotton  per 
pound. 

i-'k-«oOt-«h-t-»i-'h-»i-»i-ii-'i-n-n-'i-'totOi-'tOco 
oococooo*— 't— 'tot-'o^-'i-'toen-^iotooscoi— » 
tot04:>^pooooooenOcnootoooeD^*».co.-'^-'cococn 
OOOPcnooooosooi-irfs^tobooooscnt^cocnooco 

112 


THE  DISTRIBUTION  OF  WEALTH. 


WHEAT-  AND    RYE-CROPS    OP    THE    PRINCIPAL    COUNTRIES    OP 


Tear. 


1874. 
1875. 
1876. 
1877. 
1878. 
1879. 
1880. 
1881  . 
1882. 
1883. 


Wheat  -  crop 
of  princi- 
pal coun- 
tries of  Eu- 
rope, bush- 
els. 

931,414,000 

764,894,000 

766,943,000 

891,798,000 

894,465,000 

703,523,000 

810,900,000 

807,770,000 


EUROPE,   ETC. 


Rye-crop  of  princi-  Total  Wheat- and 
pal  countries  of  Rye-crops,  bush- 
Europe,  bushels.        els. 


1,200,058,000 
982,050,000 
990,008,000 

1,128,000,000 

12,272,523,000 

954,025,000 

956,075,000 

994,919,000 


2,131,419,000 
1,746,944,000 
1,756,951,000 
2,019,798,000 
2,166,978,000 
1,657,548,000 
1,766,976,000 
1,802,690,000 


Imports  of 
Wheat  to 
Great  Brit- 
ain from 
India.bush- 
els. 


8,097,123 

10,698,518 

1,597,273 

3,037,022 

8,964,168 

17,507,907 

12,273,632 


Year. 


Total  wheat- crop  of 
Europe,  bushels. 

1880 1,128,000,000 

1881 1,160,000,000 

1882 1,283,000,000 

1883 1,553,000,000 

1884 1,270,000,000 

1885 1,183,000,000 

1886 1,108,000,000 

1887 1,245,000,000 


Total  wheat-crop  of  the 
world,  bushels. 

2,111,000,000 

2,025,000,000 

2,282,000,000 

2,054,000,000 

2,293,000,000 

2,095,000,000 

2,055,000,000 

2,188,000,000 


PRICES  OP  LEADING  ARTICLES  FOR  THE  YEARS  1867,  1868,  AND 
1870,  COMPARED  WITH  PRICES  OF  1884,  AND  OTHER  YEARS,  AS 
DESIGNATED,  THE  AVERAGE  PRICES  OP  THE  FORMER  YEARS  BEING 
REPRESENTED  BY  100. 

1867-68  and  '70.       1884. 

Cotton  goods 100  56.3 

Coffee 100  67 

Coal  (anthracite) 100  58 

Iron  (bar) 100  48.3 

Iron  (pig) 100  52 

Leather 100  70 

Sugar  (refined) 100  70 

18&t-86. 

Mackerel 100  77 

Wool 100  100 

Bice 100  40.8 

100  60 


THE  DISTRIBUTION  OF   WEALTH.  113 

Butter 100  60 

Wheat 100  47.6 

Corn 100  66.4 

Mess  pork 100  63 

Beef  (salted) 100  70 

Hams 100  71 

1869.  1888. 

Freight  charges,  Chicago  to  New  York  ...    100  46.6 

1867-75.  1885-89. 

Yield  of  wheat  per  acre 100  94.23 

"       com         "        100  97 

1866-71.  1889. 

Beef  cattle  (New  York) 100  67.7 


CHAPTEK   lY. 


LIMITATIONS  ON  THE  AMOUNT  OP  WEALTH — HOW  THE  VALUE  OP 
LABOR  IS  DETERMINED — EFPECTS  OP  THE  AGGREGATION  OP 
WEALTH. 

The  following  chapter  may  be  summarized  as  follows : 

The  wealth  of  a  country  is  divided  into  perishable  property 
and  durable  property. 

Perishable  property  consists  of  those  products  which  are  of 
such  nature  as  to  be  susceptible  of  preservation  during  only  a 
short  period,  and  which  must  therefore  be  quickly  consumed. 

Durable  property  consists  of  lands  and  other  things  possessing 
value  which  are  not  created  by  labor,  and  such  products  of 
labor  as  may  be  preserved  in  continued  use  from  year  to  year. 

The  distinction  here  drawn  is  not  marked  by  a  clearly-defined 
boundary,  but  it  serves  the  purpose  of  a  classification  exhibit- 
ing certain  differences  in  character  of  different  kinds  of  property 
considered  in  this  chapter.  Only  a  small  part  of  the  products 
of  labor  can  be  preserved  from  year  to  year,  and  there  are  but 
few  forms  of  wealth  which  may  be  handed  down  from  one 
generation  to  another.  The  amount  of  wealth  which  can  be 
saved  or  preserved  constitutes  but  a  small  portion  of  the  annual 
product  of  labor. 

The  amount  of  perishable  wealth  which  may  be  accumulated 

8 


114  THE  DISTRIBUTION  OF  WEALTH. 

at  any  one  time  is  determined  by  the  demands  of  consumption, 
and,  in  proportion  to  population,  varies  but  little  from  year  to 
year.  The  quantity  of  durable  property  which  may  be  created, 
and  which  may  exist  at  any  one  time,  is  likewise  limited  by  the 
demand  for  use.  The  demand  for  durable  property  for  any 
given  time  and  population  is  determined  by  the  natural  and 
acquired  wants  of  the  people,  and  is  therefore  dependent  on  the 
degree  of  civilization  by  which  the  habits  and  tastes  of  the 
people  are  determined.  The  demand  is  further  limited  by 
established  economic  conditions  which  regulate  the  distribution 
of  wealth.  The  capacity  to  produce  being  greater  than  the 
demand  is  not,  at  least  in  this  country,  an  operative  limitation. 
The  variation  in  the  demand  from  year  to  year  is  within  narrow 
limits. 

There  are,  therefore,  limits  upon  the  amount  of  wealth  which 
a  people,  constituting  a  single  industrial  and  social  entity,  may 
acquire,  imposed,  first,  by  natural  laws;  second,  by  economic 
conditions  developed  out  of  the  growth  of  organized  society, 
which  restrain  the  productive  power  of  labor  and  control  the 
distribution  of  its  products. 

The  savings  of  labor,  during  any  given  period,  are  represented 
by  the  total  amount  of  the  increase  of  durable  property  during 
that  period. 

The  aggregate  of  such  increase  is  small,  and  whatever  part  is 
absorbed  by  the  increased  wealth  of  a  few  is  deducted  from  the 
amount  which  would  otherwise  be  distributed  among  the  people. 

The  value  of  property  arises  out  of  the  demand  for  its  use. 
The  demand  for  property  owned  by  one  person  for  use  by 
others  arises  out  of  the  fact  that  those  who  desire  it  are  them- 
selves without  it.  The  wealth,  therefore,  of  one  individual,  to 
the  extent  that  it  consists  of  property  in  excess  of  that  moder- 
ate amount  which  he  may  himself  use,  implies  a  corresponding 
want  of  wealth  in  others.  Great  fortunes  are  possible  only  to 
the  few.  One  man  may  own  a  fortune  of  one  million  only  by 
virtue  of  the  fact  that  one  thousand  men  own  nothing,  or  a  much 
larger  number  own  less  than  they  use. 

The  addition  to  the  amount  of  durable  property  in  any  coun- 
try is  subject  to  the  limitation  of  the  demand,  which  increases 
but  slowly,  and  in  a  diminishing  ratio  as  the  stationary  state  of 


THE   DISTEIBUTION   OF   WEALTH.  115 

wealth  is  approached;  and  as  the  rich  grow  richer,  in  more 
rapid  ratio  than  the  average  increase  of  durable  property,  the 
poor  grow  poorer. 

Property,  which  is  the  right  conferred  by  natural  law  and  by 
the  laws  of  society  to  the  exclusive  use,  possession,  and  control 
of  any  article  or  thing,  may  exist  in  anything  which  can  be 
made  the  subject  of  exclusive  possession  or  control. 

The  conditions  which  give  value  to  property  are,  first,  utility ; 
second,  limitation  of  quantity.  Nothing  can  possess  value  that 
is  not  useful,  or  of  which  the  supply  is  without  limit. 

Air  possesses  utility,  yet  it  is  without  value,  for  the  reason 
that  the  supply  cannot  be  made  subject  to  human  control. 
Fish  in  the  sea  possess  no  value,  but  fish  in  a  private  pond  have 
value.  In  the  one  case  they  are  not  under  the  control  of  any 
person,  while  in  the  other  case  they  are.  Water  possesses 
utility,  but  is  without  value  except  under  special  conditions 
which  limit  the  supply  and  make  it  a  subject  of  individual 
control. 

In  times  of  drouth,  when  it  becomes  necessary  to  transport 
water  from  one  locality  to  another,  water  is  reduced  to  possession 
and  may  acquire  commercial  value.  In  cities,  where  labor  and 
capital  are  employed  to  convey  water  to  the  consumer,  water 
acquires  value.  When  water  is  conveyed  through  ditches  for 
purposes  of  irrigation,  it  becomes  property  and  acquires  value. 

The  word  useful  in  this  connection  is  not  employed  in  the 
limited  sense  of  what  is  good  for  man,  but  in  the  broader  sense 
of  being  an  object  in  demand  for  use.  Whatever  meets  any 
human  desire  or  want  is  useful  in  the  sense  of  the  word  as  here 
employed.  The  fact  that  the  only  uses  to  which  an  article  may 
be  put  are  immoral,  or  even  criminal,  is  immaterial,  except  as 
modifying  the  degree  of  utility.  That  it  is  in  demand  for  such 
purposes  may  give  it  value  as  property. 

It  is  quite  evident  that  when  the  supply  of  an  article  is  with- 
out limit,  so  as  to  be  at  the  command  of  every  person  without 
exertion  on  his  part,  such  article  can  possess  no  value,  and  can- 
not be  made  a  subject  of  wealth.  When  the  supply  of  a  com- 
modity is  in  excess  of  what  can  be  used,  the  excess,  being 
without  use,  is  also  without  value. 


116  THE  DISTRIBUTION   OF  WEALTH. 

The  value  of  an  article  may  be  reduced  or  destroyed  by  the 
smallness  as  well  as  by  the  excess  of  quantity.  The  quantity 
may  be  so  limited  as  to  prevent  its  use  for  purposes  to  which  it 
might  be  applied  if  more  abundant. 

Only  such  quantity  of  any  commodity  as  can  be  used  is  useful ; 
but  many  things  not  required  for  use  at  present,  for  the  reason 
that  the  quantity  is  in  excess  of  the  demand,  possess  value  be- 
cause of  the  demand  which  will  arise  in  the  future ;  but  the 
more  distant  the  time  when  they  will  be  called  into  use  the  less 
the  value. 

The  value  of  perishable  articles  such  as  food  or  clothing 
depends  upon  their  being  called  into  use  within  a  short  time. 
The  value  of  clothing  is  subject  to  destruction  not  only  by  decay, 
but  also  by  change  of  fashion.  The  products  of  iron  may  be 
longer  preserved ;  but  even  iron  decays,  and  new  devices  destroy 
the  value  of  old. 

The  value  of  perishable  articles  deteriorates  rapidly  in  pro- 
portion as  the  quantity  on  hand  exceeds  the  present  demand ; 
and  the  shorter  the  time  within  which  they  must  be  consumed 
the  greater  the  reduction  in  value  caused  by  an  over-abundant 
supply. 

The  interest  value  of  capital  reduces  the  value  of  property 
held  only  for  future  use.  In  estimating  the  value  of  an  article 
which  in  ten  years  will  be  worth  one  hundred  dollars,  but  which 
cannot  be  used  in  the  mean  time,  we  must  take  into  account 
the  cost  of  storage,  insurance,  and  interest,  and  risk  of  loss  by 
theft  or  other  destructive  agency. 

Any  excess  of  the  supply  of  articles  produced  by  labor  over 
the  present  demand  must  compete  with  the  future  product  of 
labor,  and  therefore,  in  measuring  the  value  of  an  excess  of  a 
product  beyond  the  immediate  demand,  the  probabilities  of 
future  production  must  be  taken  into  account. 

As  there  can  be  no  demand  for  a  greater  quantity  of  any  prod- 
uct than  can  be  used  within  a  period  limited  by  the  conditions 
which  we  have  mentioned,  an  excess  beyond  that  quantity  can 
possess  no  value.  An  excess  creates  an  eager  and  unhealthy 
competition,  which  rapidly  diminishes  the  value  of  the  entire 
product.  The  point  of  highest  value  of  the  whole  product  is 
within  the  limit  of  the  normal  demand. 


THE  DISTRIBUTION  OP  WEALTH.  117 

"When  the  supply  of  any  product  is  equal  to  the  normal 
demand  for  consumption,  the  limit  of  wealth  as  to  that  product 
has  been  reached ;  an  excess  not  only  does  not  add  to  the  total 
value  of  the  whole,  but  reduces  the  total  value. 

To  illustrate :  When  the  potato  crop  is  sufficient  to  meet  the 
demand  for  consumption,  an  increase  of  the  potato  product 
cannot  give  additional  value  to  the  entire  product, — cannot 
increase  the  wealth  of  the  nation.  Suppose,  for  instance,  that 
the  American  people  have  capacity  to  consume,  in  one  year, 
twenty  million  bushels  of  potatoes,  and  require  no  more,  and 
that  this  quantity  of  potatoes  is  worth  $8,000,000.  Now  add  to 
this  product  of  twenty  million  bushels,  five  million  bushels  more, 
and  we  have  a  total  supply  of  twenty-five  million  bushels.  This 
twenty-five  million  bushels  would  be  worth  less  than  $8,000,000 ; 
how  much  less  depends  upon  conditions,  the  effect  of  which  can 
be  determined  only  by  the  measurement  of  actual  results.  The 
possible  modifying  effect  of  a  foreign  demand  is  not  here  con- 
sidered. 

The  price  of  an  article  is  rapidly  advanced  by  competition 
between  consumers,  and  rapidly  diminished  by  competition 
among  producers.  The  highest  pecuniary  value  of  a  crop  is 
reached  at  a  point  much  below  the  amount  of  the  total  possible 
consumption. 

To  illustrate :  The  amounts  and  total  values  of  the  com,  oat, 
and  potato  crops  of  the  United  States  during  a  series  of  years, 
as  reported  by  the  Commissioners  of  Agriculture,  are  as  follows : 

CORN. 

Year.                  Product  in  bushels.  Value. 

1879 1,754,691,676  $694,618,304 

1880 1,717,434,543  679,714,490 

1881 1,194,916,000  759,482,170 

1882 1,617,025,100  783,867,175 

1883 1,566,000,000  658,700,000 

1884  .  .   1,795,528,432  640,735,560 

1885 1,936,176,000  635,674,630 

1886 1,665,441,000  610,311,000 

1887 1,456,131,000  646,106,770 

1888 1,987,790,000  677,561,380 

1889 2,112,892,000  597,918,129 


118 


THE  DISTEIBUTION  OF  WEALTH. 


OATS. 

Year.                                                Product  in  bushels.  Value. 

1879 407,858,000  $146,829,240 

1882 488,250,610  182,978,022 

1883 571,302,400  188,629,792 

1884 583,628,000  161,528,470 

1885 629,400,000  179,631,860 

1886 624,134,000  186,137,930 

1887 659,618,000  200,699,790 

1888 701,735,000  195,424,240 

1889 751,615,000  171,781,008 

POTATOES. 

Year.                                               Product  in  bushels.  Value. 

1879 169,458,539  $81,848,474 

1882 170,972,508  95,304,844 

1883 208,164,425  87,849,991 

1884 190,642,000  75,524,290 

1885 175,029,000  78,153,403 

1886 163,000,000  73,350,000 

1887 134,000,000  91,120,000 

The  total  aggregate  product,  in  bushels,  of  all  cereals  (corn, 
wheat,  oats,  rye,  barley,  and  buckwheat),  and  the  values  of  the 
same,  as  reported  by  the  Department  of  Agriculture,  are  as 
follows : 

Year.                                            Product  in  bushels.  Value. 

1880 2,718,193,501         $1,361,497,704 

1881 2,066,029,570  1,470,957,200 

1882 2,699j394,496  1,468,693,393 

1883 2,829,319,089  1,280,765,927 


It  will  be  observed  that  the  value  of  the  largest  corn  crop  is 
less  tban  that  of  the  smallest ;  that  the  value  of  the  oat  crop 
diminishes  as  the  quantity  increases,  subject  to  the  modification 
resulting  from  a  diminished  or  increased  corn  crop ;  while  the 
small  potato  crop  of  1887  is  of  greater  value  than  the  largest 
crop  reported.  The  value  of  the  potato  crop  depends  much  on 
how  the  crop  is  distributed ;  and  the  same  is  true,  but  in  a  less 
degree,  of  the  corn  and  oat  crops. 

It  will  be  observed  that  the  total  aggregate  crop  of  cereals  of 


THE   DISTRIBUTION  OP  WEALTH.  119 

1881,  the  smallest  of  the  four  aggregates  enumerated  above,  has 
the  greatest  value.  The  value  of  the  crop  of  one  year  is  affected 
by  the  amount  of  the  crop  remaining  over  from  the  year  pre- 
vious, and  the  gradual  increase  of  population  causes  a  corre- 
sponding increase  in  the  demand,  while  the  development  of  the 
cattle  industry  in  the  Western  Territories  tends  to  reduce  the 
prices  of  both  com  and  oats,  grass-fed  cattle  taking  the  place 
of  corn-fed  animals ;  but  the  operation  of  the  principle  stated 
very  clearly  appears. 

The  following  table  shows  the  estimates  of  the  Department  of 
Agriculture  of  the  average  yield  per  acre,  and  the  average  price 
per  bushel  of  corn  and  oats  during  a  series  of  years. 

Corn.  Oats. 

Year. 

1871 

1872 

1873 

1874 

1875 

1876 

1877 

1878 

1879 

1880 

1881 

1882 

In  1881  the  yield  of  corn  was  but  18.5  bushels  per  acre  ;  the 
value  of  the  product  per  acre  was  $11.71.  In  1879  the  average 
yield  was  29  bushels  per  acre;  the  value  of  the  product  per 
acre  was  $10.84.  In  1882  the  average  yield  of  oats  per  acre  was 
24.5  bushels ;  the  value  of  the  product  per  acre  was  $11.87.  In  1878 
the  average  yield  of  oats  per  acre  was  31.5  bushels ;  the  value 
of  the  product  per  acre  was  $7.75.  In  1874  the  yield  of  both 
the  oat  and  corn  crops  was  small ;  and  the  average  value  of  the 
corn  crop  per  acre  was  $13.41,  and  that  of  the  oat  crop  $11.44. 

The  value  of  the  oat  crop  depends  upon  the  quantity  of  corn 
grown  the  same  year  and  the  year  previous. 

The  variation  in  the  area  of  crops  grown,  which  is  not  here 
taken  into  account,  affects  the  price,  so  as  to  somewhat  vary  the 


Yield. 

Price. 

Yield. 

Price. 

29 

48.2 

30.5 

40 

30.8 

39.6 

30 

85.6 

24.3 

48 

28 

87 

20.8 

64.5 

22 

62 

29.3 

42 

29.5 

36 

26 

37 

24 

36 

26.5 

36.6 

81.8 

29 

27 

31.7 

31.5 

24.6 

29 

37.4 

28.6 

33 

27.5 

39.6 

25.8 

36 

18  5 

63.3 

24.8 

46.6 

24.5 

48.2 

24.5 

48.5 

120  THE  DISTRIBUTION  OF  WEAX.TH. 

ratio  between  the  yield  per  acre  and  the  price.  But  the  fact 
that  as  the  product  increases  the  value  diminishes  is  clearly- 
illustrated. 

During  the  last  eight  years  the  value  of  corn,  in  many  locali- 
ties, has  varied  as  much  as  one  hundred  per  cent,  from  the 
lowest,  or  fifty  per  cent,  from  the  highest  price.  The  value  of 
the  total  annual  product  has  varied  as  much  as  twenty  per  cent, 
from  the  highest  price. 

What  is  here  shown  as  to  com,  oats,  and  potatoes  is  true  also 
of  the  meat  product.  Where  hogs  were  sold,  in  1888,  at  five 
dollars  per  hundred  to  the  shipper,  at  the  same  date  in  the  year 
1889  they  were  selling  for  three  dollars  per  hundred. 

About  thirty  per  cent,  of  our  wheat  is  exported,  and  the  value 
of  this  crop  is  therefore  subject  to  the  variations  occasioned  by 
fluctuations  in  the  amount  of  the  total  product  competing  in  the 
same  market. 

It  will  be  seen  that  our  agricultural  product,  most  of  the 
time,  has  been  in  excess  of  that  amount  which  would  be  of 
greatest  value  to  the  producer,  and  beyond  which  the  returns 
for  agricultural  products  cannot  be  increased. 

Our  farmers  diminish  their  incomes  as  they  increase  their 
crops.  Wet  seasons,  drouths,  and  early  frosts  have  been  to  the 
farmers  blessings  in  disguise ;  and  the  Hessian  fly,  the  chinch- 
bug,  and  the  potato-bug  have  been  the  farmers'  loyal  friends. 
The  only  cause  for  complaint  lies  in  the  fact  that  they  have 
localized  their  operations  in  such  manner  that  the  general  gain 
has  been  at  the  expense  of  the  people  of  particular  localities. 
Our  manufacturers,  who  do  not  enjoy  these  natural  advantages, 
have  found  a  substitute  in  suspensions  and  lock-outs. 

The  fluctuations  in  the  price  of  potatoes  are  greater  than  the 
fluctuations  in  the  price  of  corn  or  wheat,  generally  and  locally, 
not  only  because  of  the  greater  variation  in  the  amount  of  the 
annual  product,  but  for  the  further  reason  that  the  surplus,  not 
needed  for  immediate  consumption,  cannot  be  carried  over  to 
another  year. 

What  is  true  as  here  shown  of  potatoes  is  true  of  every  other 
agricultural  product,  and  also  of  every  manufactured  product. 
It  is  true  of  woollen  fabrics,  hardware,  machinery,  houses,  mills, 
telegraphs,  and  railways.     One  railroad  more  than  enough  is 


THE  DISTRIBUTION  OP  WEALTH.  121 

one  railroad  too  many,  and  adds  nothing  to  the  total  value  of 
the  railway  property  of  the  whole  country.  "When  the  people 
are  supplied  with  houses  in  sufficient  number,  that  satisfy  their 
wants  and  gratify  their  tastes,  more  houses  can  add  nothing  to 
the  total  value  of  the  whole.  An  excess  beyond  the  demand  is 
superfluous.  When  the  market  is  glutted  with  houses  to  rent 
and  houses  to  sell,  rents  and  prices  go  down ;  and,  as  the  excess 
increases,  prices  fall  in  accelerated  ratio. 

Gold  and  silver  are  valuable  chiefly  as  measures  of  value  in 
commerce.  Their  usefulness  in  the  form  of  money,  and  their 
value  for  every  purpose,  depends  upon  the  limitation  of  the 
supply.  An  increase  in  the  quantity  of  gold  and  silver  over  the 
present  supply  could  not  add  to  the  total  value  of  the  product. 
An  increase  in  the  amount  would  lead  to  the  use  of  a  greater 
quantity  in  the  arts ;  but  the  increased  consumption  would  be 
the  effect  of  lower  values.  An  increase  in  the  coinage  of  gold 
and  silver  reduces  the  value  of  money  in  the  ratio  of  the  increase 
in  the  volume  of  coin.  If  gold  were  as  abundant  as  iron,  it 
would  lose  its  value  as  a  medium  of  exchange,  and  its  then 
value  would  be  such  as  it  might  possess  for  uses  to  which  it  is 
not  now  applied. 

Since,  then,  nothing  except  that  which  is  useful  can  possess 
value,  and  only  a  limited  amount  of  each  species  of  property 
may  be  used,  only  a  certain  amount  of  wealth  can  exist  in  each 
of  the  several  products  of  labor.  The  aggregate  possible  wealth 
of  a  people  being  the  sum  of  a  certain  number  of  limited  quan- 
tities, is  itself  limited.  The  people  of  a  nation  can  create  so 
much  property  and  no  more.  When  the  supply  is  equal  to  the 
demand  the  limit  of  a  nation's  wealth  has  been  reached,  except 
as  that  demand  may  be  increased. 

The  demand  has  its  limitations  in  the  number  and  in  the 
natural  and  acquired  habits  and  tastes  of  the  people.  While, 
therefore,  the  demand  is  not  stationary,  but  progressive,  not 
unvarying,  but  elastic,  its  temporary  variations  are  within 
narrow  limits,  and  its  permanent  growth,  though  steady,  is  not 
rapid.* 

*  It  must  have  been  seen,  more  or  less  distinctly,  by  political  economists, 
that  the  increase  of  wealth  is  not  boundless ;  that  at  the  end  of  what  they 


122  THE  DISTRIBUTION  OF  WEALTH. 

For  the  purpose  of  illustration,  let  us  assume  that,  measured 
in  dollars  of  the  present  value,  the  limit  of  wealth  which  can 
exist  in  this  country  at  the  present  time,  with  its  present  popu- 
lation and  under  present  conditions  as  to  education  and  culture 
of  the  people,  is  $70,000,000,000.  Let  us  then  assume,  further, 
that  one-half  of  this  amount  is  aggregated  wealth,  owned  by- 
one  class  of  people  and  used  by  others,  property  bringing 
revenue  to  the  owners  in  the  shape  of  interest,  rents,  profits  on 
capital  invested  in  trade,  railways,  manufacturing  establish- 
ments, etc.  Let  us  further  assume  that  one-half  of  this  aggre- 
gated wealth — ^that  is,  $35,000,000,000 — is  amassed  in  fortunes 
varying  from  $100,000  to  $200,000,000.  It  follows  that  the 
great  body  of  the  people  own  less  property  than  they  use.  If 
the  entire  amount  were  divided  among  the  whole  people,  allow- 
ing to  each  one  the  amount  required  for  his  own  use,  that 
amount  being  dependent  upon  the  education,  tastes,  and  habits 
of  each  individual,  no  one  person  could  be  the  owner  of  a  great 
amount  of  property.  Interest,  rents,  and  profits  would  be 
abolished  if  such  conditions  were  established  and  could  be  main- 
tained. 

Supposing  the  distribution  of  property  to  be  as  assumed. 
When  the  people  who  possess  little  or  no  property  seek  to 
acquire  it,  they  are  confronted  with  the  fact  that  there  is  a 
limit  to  the  total  amount  of  the  wealth  of  a  nation,  and  that 


term  the  progressive  state  lies  the  stationary  state ;  that  all  progress  in  wealth 
is  but  a  postponement  of  this,  and  that  each  step  in  advance  is  an  approach 
to  it.  We  have  now  been  led  to  recognize  that  this  ultimate  goal  is  at  all 
times  near  enough  to  be  fully  in  view  ;  that  we  are  always  on  the  verge  of  it, 
and  that  if  we  have  not  reached  it  long  ago  it  is  because  the  goal  itself  flies 
before  us.  The  richest  and  most  prosperous  countries  would  very  soon  attain 
the  stationary  state  if  no  further  improvements  were  made  in  the  productive 
arts,  and  if  there  were  a  suspension  of  the  overflow  of  capital  from  those 
countries  into  the  uncultivated  or  ill-cultivated  regions  of  the  earth. 

"  The  impossibility  of  ultimately  avoiding  the  stationary  state — this  irre- 
sistible necessity  that  the  stream  of  human  industry  should  finally  spread 
itself  out  into  an  apparently  stagnant  sea — must  have  been  to  the  political 
economists  of  the  last  two  generations  an  unpleasing  and  discouraging  pros- 
pect; for  the  tone  and  tendency  of  their  speculations  goes  completely  to 
identify  all  that  is  economically  desirable  with  the  progressive  state,  and  with 
that  alone." — John  Stuart  Mill. 


THE  DISTRIBUTION  OF   WEALTH.  123 

one-half  of  that  possible  total  amount  is  already  in  the  hands 
of  a  comparatively  small  number.  They  cannot  create  new 
wealth  because  the  limit  of  wealth  has  been  already  reached. 
If  they  seek  a  larger  share  of  that  which  already  exists,  they 
are  confronted  with  the  fact  that  those  who  are  in  possession 
carefully  guard  and  preserve  it,  while  they  derive  revenue  from 
its  use  by  others. 

But  it  may  be  said  that,  notwithstanding  there  are  enough 
dwellings  to  supply  the  whole  people,  those  who  do  not  own 
houses  may  build  new  ones  for  themselves.  True,  but  by  so 
doing  they  do  not  add  to  the  total  value  of  the  houses  in  the 
country ;  they  do  not  increase  the  amount  of  the  nation's 
wealth.  The  effect  is  a  distribution  of  property;  one  more 
owner  has  been  added.  By  this  method  A,  B,  and  C  may 
force  a  division  of  the  aggregate  wealth  of  the  nation.  But 
what,  if  any,  are  the  obstacles  in  the  way  ?  Let  us  see.  A 
seeks  to  build  a  house  worth  one  thousand  dollars.  He  does  not 
possess  the  one  thousand  dollars.  He  must  therefore  acquire 
it  from  those  who  have  it.  Those  who  own  the  property  of 
the  nation,  through  the  revenues  derived  from  its  use,  absorb 
the  country's  increase  of  wealth,  and  the  aggregation  of  wealth 
continues  in  increased  ratio.  A  must  therefore  obtain  one 
thousand  dollars  of  the  aggregated  wealth  of  the  country,  or 
one  thousand  dollars  of  property  now  belonging  to  others. 
He  must  do  this  through  the  medium  of  wages  or  of  prices 
received  for  the  product  of  his  labor.  He  must  exchange 
his  labor,  or  the  product  thereof,  with  the  capitalist  for  that 
one  thousand  dollars.  His  labor  competes  in  the  same  market 
with  the  labor  of  others  equally  needy,  who  sell  their  labor 
for  what  they  require  to  eat,  drink,  and  wear,  and  pay  the 
rents  of  the  houses  they  live  in.  If  A  does  better  than  the 
average,  it  is  by  habits  of  harsh  economy  to  which  he  is  little 
accustomed.  The  saving  of  one  thousand  dollars  cannot  be 
accomplished  without  years  of  patient  self-denial.  Sickness, 
misfortune,  or  want  of  employment  may  come  at  any  time  and 
waste  his  little  store  of  savings.  The  chances  are  against  him. 
His  savings,  in  the  first  instance,  must  take  the  form  of  money. 
In  order  that  A  may  save  a  dollar,  B,  C,  and  D  must,  at  the 
same  time,  expend  a  dollar.     Saving  in  the  form  of  money 


124  THE  DISTRIBUTION  OP  WEALTH. 

means  suspended  consumption.  Suspended  consumption  means 
a  reduction  in  the  demand  for  labor. 

The  more  A  saves  the  more  difficult  it  is  for  others  to  save. 
Saving  and  spending  are  correlative  acts.  The  amount  of  money 
in  use  is  not  sufficient,  and  in  its  nature  cannot  be  sufficient,  to 
enable  a  large  number  of  people  to  store  wealth  in  the  form  of 
money  at  the  same  time. 

Every  worker  is  therefore  dependent  upon  conditions  which 
restrict  his  power  to  save.  In  his  attempt  to  do  so  he  enters 
into  competition  with  every  other  person  who  is  endeavoring  to 
save.  Among  them  they  strive  each  for  a  share  of  a  limited 
quantity.  Thus  the  working-people,  in  their  efforts  to  accumu- 
late property,  are  forced  into  destructive  competition,  while 
capital,  in  the  form  of  credits  or  of  revenue-bearing  property, 
exacts  its  tribute  of  interest,  rent,  or  profits  on  the  product  of 
labor,  and  draws  to  itself,  in  accelerated  ratio  as  its  volume 
Increases,  the  property  of  the  nation. 

There  may  be  said  to  be  two  principal  reasons  why  the  poor 
remain  poor.  The  first  is  that  the  products  of  labor  are  absorbed 
by  the  profits  of  capital,  and  the  money  tribute  which  labor  is 
compelled  to  pay  to  aggregated  wealth  prevents  those  small  ac- 
cumulations of  money  which,  during  the  period  intervening 
between  the  time  of  earning  and  the  time  of  investing,  must 
represent  the  savings  of  the  working-people.  The  second  reason 
is  the  great  aggregate  amount  of  unemployed  labor. 

As  to  the  first.  A  possesses  a  fortune  of  a  hundred  millions. 
How  did  he  acquire  it?  Assuming  that  labor  is  worth  one 
dollar  and  fifty  cents  per  day,  that  one  hundred  million  dollars 
represents  66,666,666  days'  labor,  or  four  days'  labor  for  each 
able-bodied  man  in  the  United  States.  What  consideration  did 
A  give  for  all  this  wealth  ?  Shrewdness  and  cunning  in  manip- 
ulating markets,  skill  in  operations  on  the  board  of  trade.  He 
schemed  for  it,  he  played  with  loaded  dice,  and  won. 

As  to  the  second  reason.  Labor  under  present  conditions  is 
unable  to  employ  itself;  it  is  unable  to  combine  its  power ;  with- 
out the  aid  of  accumulated  capital  it  can  build  neither  mills  nor 
houses ;  and  when  capital  owns  houses  and  mills  enough  to  satisfy 
the  demand,  all  that  it  can  profitably  use  or  rent,  it  has  no 
interest  in  producing  more. 


THE  DISTRIBUTION  OF  WEALTH.  125 

The  productive  capacity  of  labor  may  be  such  that  one-half 
or  two-thirds  of  the  productive  power  of  the  people  is  fully 
adequate  to  meet  the  demands  of  consumption.  But  the  labor 
of  the  individual  worker  can  be  utilized  only  in  combination  with 
that  of  others.  One  worker  is  but  a  fractional  part  of  the  great 
industrial  unit  which  combines  in  a  relation  of  complicated 
interdependence  not  only  many  workers,  but  many  industries, 
and,  in  a  measure,  the  whole  people  of  one  country  or  of  many 
countries  who  exchange  in-  the  same  market  the  products  of 
labor.  The  individual  worker,  therefore,  can  create  wealth 
only  by  working  in  conjunction  with  the  industrial  and  com- 
mercial forces  of  the  community  of  which  he  forms  a  part.  As 
a  producer  of  wealth  he  is  dependent  on  the  co-operation  of 
others,  and  from  this  dependence  there  is  no  escape.  Produc- 
tion is  limited  by  consumption.  The  production,  distribution, 
and  consumption  of  products  are  relative  and  dependent  parts 
of  an  industrial  unit.  When  production  is  restricted,  consump- 
tion is  likewise  limited ;  when  consumption  is  reduced,  produc- 
tion falls  off  in  corresponding  measure;  when  distribution  is 
hindered,  production  and  consumption  both  suffer  diminution. 

Production  and  distribution  are  effected  through  the  use  of 
money,  and  the  financial  system  of  a  people  is  brought  in  as  a 
factor  in  every  industrial  or  commercial  operation, — a  factor 
which,  more  than  any  other,  is  subject  to  the  control  of  indi- 
viduals or  combinations  of  individuals. 

The  total  savings  of  a  people  are  represented  by  the  amount 
of  durable  property  created  and  used  and  the  supply  of  perish- 
able commodities  on  hand.  Ninety  per  cent,  of  the  products  of 
industry  are  consumed  as  they  are  produced.  The  margin  of 
savings  is  necessarily  small ;  and  to  secure  a  part  of  this  re- 
mainder, the  worker  competes  with  capital,  and,  where  capital 
is  centralized  in  great  fortunes,  always  at  a  disadvantage. 

The  amount  of  interest,  rent,  or  profit  earned  by  capital  in 
excess  of  the  amount  consumed  by  the  owners  of  capital  neces- 
sarily takes  the  form  of  durable  property,  or  of  credits,  and 
absorbs  the  annual  savings  of  the  people. 

Hitherto  prices  of  labor  have  been  sustained  and  increased  by 
reason  of  the  unprecedented  growth  of  the  permanent  wealth 
of  the  country, — the  construction  of  railways,  factories,  mills, 


126  THE  DISTEIBUTION  OF  WEALTH. 

dwellings,  and  every  other  species  of  durable  property, — and 
because  of  the  demand  of  the  working-classes  for  better  food 
and  clothing.  But  the  margin  of  savings  has  not  increased  in 
equal  ratio.  "We  have  been  rapidly  moving  towards  the  end, — 
that  point  in  development  where  the  supply  of  permanent  prop- 
erty begins  to  overreach  the  demand  and  labor  is  deprived  of  its 
margin  of  savings. 

Since  wealth  can  exist  only  in  the  form  of  durable  property 
and  the  necessary  supply  of  perishable  commodities  for  present 
use,  the  total  savings  of  a  people  during  a  period  of  five  years 
are  represented  by  the  amount  of  the  aggregate  increase  of  the 
permanent  or  durable  property  of  the  whole  country  during  that 
period.  "When,  at  any  given  time,  there  are  already  enough 
railways,  factories,  furnaces,  mills,  tools,  and  other  durable  prop- 
erty to  satisfy  the  existing  demand,  the  growth  of  wealth  during 
the  ensuing  year  must  be  limited  to  the  amount  of  the  increase 
of  the  demand  during  that  year.  This  amount  will  represent 
the  aggregate  amount  of  the  possible  savings  of  the  whole  peo- 
ple during  that  period.  Dividing  that  amount,  so  ascertained, 
by  the  number  of  the  population  of  the  country,  we  have  the 
average  possible  savings  for  each  person. 

The  total  increase  of  wealth  in  the  United  States  during  the 
period  from  1870  to  1880,  as  shown  by  census  estimates,  was 
$13,573,881,493.  In  1870  the  wealth  per  capita  of.  the  people 
of  the  TJnited  States  was  $780.  The  increase  in  population  from 
1870  to  1880  was  11,587,412.  Allowing  to  this  increased  popula- 
tion the  same  per  capita  wealth,  we  have  $780  X  11,587,412  = 
$9,038,181,360,  which  must  be  subtracted  from  $13,573,881,493, 
the  aggregate  increase,  leaving  a  remainder  of  $4,535,300,133, 
which  represents  the  total  of  the  per  capita  increase  of  wealth 
during  that  decade;  an  increase  of  ninety  dollars  per  capita 
in  ten  years,  or  nine  dollars  per  year. 

The  total  wealth  of  the  "Qnited  States  in  1870  and  in  1880 
was  much  less  than  the  amounts  given  out  as  estimates  of  the 
census  bureau,  but  for  the  present  we  will  accept  these  estimates 
as  near  approximations  of  the  wealth  of  the  country  at  these 
respective  dates. 

"We  will  now  inquire  how  this  increased  wealth  was  distrib- 
uted. 


THE  DISTRIBUTION  OP  WEALTH.  127 

During  this  period  the  capital  invested  in  the  leading  manu- 
facturing industries  and  in  railways  was  increased  in  the  amount 
of  $4,626,550,502,  ninety  millions  more  than  the  total  amount  of 
the  per  capita  increase  of  the  wealth  of  the  nation.  And,  if  we 
take  into  account  the  excessive  valuation  in  1870,  this  increase 
was  much  greater.  Nearly  the  entire  amount  of  the  increase  of 
capital  invested  in  manufacturing  and  railways  may  be  set  down 
as  80  much  added  to  the  aggregated  wealth  of  the  country ;  in 
other  words,  to  fortunes  already  large.  This  is  all  revenue- 
bearing  property.  After  deducting  the  increased  aggregation 
in  manufacturing  and  railway  capital,  there  is  left  no  margin 
of  savings  for  distribution. 

We  must  also  take  into  account  the  wealth  which  was 
invested  in  telegraphs,  telephones,  street  railways,  commerce, 
banks,  mortgage  loans,  and  palatial  dwellings,  as  well  as  the 
aggregation  of  landed  property.  Could  we  ascertain  the  total 
increase  of  property  in  the  hands  of  those  holding  more  than 
the  per  capita  amount  of  1870,  we  would  no  doubt  find  that  the 
amount  owned  by  the  remaining  classes  had  greatly  diminished. 

To  this,  the  answer  readily  suggested  will  be,  that  the  in- 
creased amount  of  capital  invested  in  manufacturing  and  in 
railways — that  in  railways  alone  being  $4,080,950,502 — was,  in 
the  main,  withdrawn  from  other  investments ;  that  capital 
which  had  already  been  aggregated  was  absorbed  in  the  creation 
of  this  new  property,  which  therefore  only  represents  old  capi- 
tal in  a  new  form.  But  from  what  sources  was  it  drawn  ?  In 
1880  the  entire  credits  of  the  country,  not  including  the  bonds 
which  represented  the  new  railway  property,  had  increased  in 
proportion  to  the  population,  rather  than  diminished.  The 
aggregations  of  real  estate  had  also  greatly  increased,  and  every 
species  of  aggregated  wealth  had  kept  full  pace  with  the  in- 
crease of  population.  And,  while  it  is  necessarily  true  that 
part  of  the  money  invested  in  railway  construction  is  with- 
drawn from  some  other  form  of  investment,  and  to  an  amount 
near  the  actual  cost  of  construction  aggregated  capital  merely 
assumes  a  new  form,  it  is  nevertheless  true  that,  at  the  expira- 
tion of  the  period  under  consideration,  when  the  net  results  of 
all  the  agencies  of  distribution  and  aggregation  of  capital  are 
ascertained,  it  will  be  found  that  the  increased  wealth  in  rail- 


128  THE  DISTRIBUTION  OF  WEALTH. 

ways,  telegraphs,  telephones,  etc.,  has  been  brought  about  with- 
out any  reduction  of  aggregated  wealth  in  other  forms  of  in- 
vestment. It  will  be  found  that  the  bank  loans  and  mortgage 
loans  to  the  people  at  large  have  increased  in  full  ratio  to  the 
increase  of  population. 

The  claim  will  also  be  made  that  the  valuation  of  property  in 
1870,  being  based  upon  an  inflated  currency,  was  much  too  high, 
thus  reducing  the  amount  of  the  increase  of  wealth  as  shown  by 
the  census.  The  accepted  estimate  is  that  the  valuation  was 
about  twenty -five  per  cent,  higher  in  1870  than  in  1880.  But 
the  estimate  of  1870  embraces  credits  to  the  extent  that  they 
were  included  in  the  assessments  of  property  for  taxation.  And 
this  is  true  also  of  the  estimate  of  1880,  or  else  the  estimate  of 
1880  is  much  too  high. 

As  values  contracted,  however,  the  credits  of  the  country  rel- 
atively appreciated.  If  we  deduct  twenty-five  per  cent,  from 
the  amount  returned  as  the  aggregate  wealth  of  the  country  in 
1870,  we  must  add  twenty-five  per  cent,  to  the  aggregate  credits 
in  1880, 

The  increase  in  the  number  of  acres  in  farms  in  1880  over 
1870  was  95,850.943  acres ;  the  increase  in  the  total  value  of 
farms,  most  altogether  attributable  to  increased  area,  was 
$934,292,915.  The  increase  in  the  total  value  of  city  real  estate, 
aside  from  increased  value  of  buildings,  was  also  very  great ;  so 
that  the  savings  from  1870  to  1880  were  probably  not  in  excess 
of  the  census  showing  which  I  have  assumed  as  the  basis  of 
this  estimate. 

It  is  not,  however,  material  to  this  inquiry  whether  this  esti- 
mate be  too  large  or  too  small,  since  it  is  clearly  evident  that 
the  process  of  aggregation  is  taking  up  not  only  the  savings  or 
increase  of  wealth,  but  also  the  wealth  already  acquired  by  the 
people.  The  distribution  of  wealth  is  year  by  year  growing 
more  unequal.  In  other  words,  the  rich  are  steadily  growing 
richer,  while  the  number  of  those  who  are  without  any  store  of 
savings  is  increasing  both  absolutely  and  relatively, — a  fact  often 
asserted,  and  as  frequently  denied,  but  a  fact,  however,  which 
the  statistics  of  wealth  clearly  demonstrate. 

The  number  of  people  without  any  store  of  wealth,  people 
who  are  wholly  dependent  upon  their  immediate  earnings  for 


THE  DISTRIBUTION  OF  WEALTH.  129 

the  necessaries  of  life,  and  the  number  who  fool  the  pinch  of 
poverty  and  want,  is  rapidly  growing  in  ratio  to  the  increase  of 
population. 

It  is  true  that  the  average  consumption  of  the  working- 
people  has  increased,  that  labor  is  better  paid,  that  the  people 
are  better  clothed,  better  housed,  and  better  fed ;  but  they  are 
more  dependent,  and  the  relative  number  of  those  who  succeed 
in  laying  by  a  store  of  wealth  as  a  provision  against  sickness, 
old  age,  or  as  a  support  for  dependent  families  is  diminishing, 
notwithstanding  the  increase  in  the  capacity  of  labor  to  produce. 

The  rapid  increase  of  wealth  now  going  on  in  the  United 
States  is  possible  in  a  country  only  during  the  period  of  its  in- 
dustrial development.  When  our  lands  shall  all  be  occupied  and 
improved ;  when  all  the  railroads  required  by  the  necessities  of 
our  commerce  shall  have  been  built ;  when  our  towns  and  cities 
shall  have  reached  that  stage  of  arrested  growth  at  which  they 
must  soon  arrive,  then  the  present  rate  of  increase  in  wealth 
will  be  no  longer  possible..  Year  by  year  the  rate  of  increase 
will  grow  less  and  less,  and  the  possible  savings  to  each  worker 
must  diminish. 

Herein  lies  the  force  of  the  objection  to  the  policy  of  per- 
mitting foreign  capital  to  invest  in  and  absorb  the  revenue- 
bearing  property  of  the  country.  Foreign  investments  in  the 
durable  property  of  the  country  represent  so  much  subtracted 
from  the  opportunities  of  our  own  people  to  acquire  wealth. 

The  margin  of  possible  savings  depending  upon  the  increase 
of  durable  property  must  diminish  as  the  rate  of  increase  in 
durable  property  is  reduced.  If  the  supply  of  durable  property 
at  the  present  time  were  adequate  to  satisfy  the  demand  during 
the  next  ten  years,  then  during  that  period  labor  would  be  em- 
ployed only  in  the  production  of  perishable  products,  articles 
designed  for  immediate  consumption,  and  there  could  be  no 
savings.  The  average  price  of  a  day's  work  during  that  time 
would  be  the  equivalent  of  the  price  of  the  food,  clothing,  etc.,  con- 
sumed per  day  by  a  worker  and  the  non-producers  dependent 
upon  him  for  support.  While,  then,  the  people  as  a  whole  could 
save  nothing,  yet  one  worker,  by  earning  as  much  as  the 
average  and  consuming  less,  would  be  able  to  retain  a  portion 
of  the  money  price  which  he  received  for  his  labor,  to  the  dis- 

9 


130  THE  DISTRIBUTION   OF  WEALTH. 

advantage,  however,  of  others.  His  savings  in  that  case  would 
represent  not  so  much  wealth  created,  but  so  much  wealth 
acquired  out  of  the  total  quantity  already  on  hand. 

The  value  of  labor  is  the  price  of  its  product.  If  the  product 
of  labor  be  confined  to  perishable  property,  articles  intended  for 
present  consumption,  then,  the  total  value  of  labor  being  equal 
to  the  total  consumption,  the  wages  of  labor  are  all  consumed 
and  nothing  is  saved.  If  labor  be  employed  also  in  the  produc- 
tion of  permanent  or  durable  property,  then  the  total  value  of 
labor  is  equivalent  to  the  value  of  the  perishable  property  con- 
sumed, plus  the  value  of  the  durable  property  created.  The 
durable  property  represents  the  amount  saved,  and  the  amount 
of  durable  property  created  during  any  period,  less  the  amount 
of  the  increase  of  aggregated  wealth,  determines  the  margin  of 
savings  covered  by  the  wages  of  labor. 

Hence,  in  new  countries  undergoing  the  process  of  rapid 
development,  where  railroads,  furnaces,  iron-mills,  and  dwelling- 
houses  are  being  constructed,  wages  are  high,  and  property  is 
easily  acquired.  The  margin  of  savings  is  large.  Eates  of  in- 
terest also  advance,  and  encroach  upon  the  margin  of  labor's 
savings,  until,  sometimes,  the  total  amount  of  savings  is  absorbed 
by  capital.  In  old  countries  and  in  old  communities,  where 
development  has  been  arrested  and  labor  is  employed  almost 
wholly  in  the  production  of  perishable  articles  and  maintaining 
in  repair  the  durable  property  already  created,  wages  tend  to 
the  minimum,  and  the  margin  of  saving  to  labor,  if  anything, 
is  very  small.  Interest,  too,  is  low,  since  interest  is  deducted 
from  the  savings  of  labor,  and  represents  the  share  of  the 
product  appropriated  by  capital.  .The  fact  that  low  wages  and 
a  low  rate  of  interest  generally  go  together,  and  high  wages 
frequently  accompany  a  high  rate  of  interest,  has  led  some 
writers  to  the  opinion  that  a  high  rate  of  interest  and  high 
wages  sustain  to  each  other  the  relation  of  cause  and  effect ; 
whereas  they  are  each  the  effect  of  the  same  cause.  The  oppor- 
tunity of  labor  for  increased  wages  is  the  opportunity  of  capital 
for  higher  interest ;  but  the  more  capital  takes  the  less  there  is 
left  for  labor;  the  more  labor  saves  the  less  there  is  left  for 
capital. 

A  country  may  be  devastated  by  war,  cities  may  be  swept 


THE  DISTRIBUTION  OF  WEALTH.  131 

away  by  fire  or  destroyed  by  earthquakes,  and  the  permanent 
wealth  of  a  country  thereby  reduced  in  the  amount  of  many 
hundred  millions  of  dollars;  yet  it  is  but  a  few  years  until  the 
loss  is  repaired,  a  new  and  more  beautiful  city  springs  up  out  of 
the  ashes  of  the  old,  and  the  aggregate  wealth  of  the  country 
is  even  greater  than  it  would  have  been  had  not  the  destruction 
taken  place.  New  buildings  and  better  ones  replace  old  and 
inferior  structures,  which,  for  the  time  sufficing,  checked  im- 
provement ;  the  way  is  cleared  to  new  enterprise,  new  fields  of 
employment  are  opened,  wages  are  advanced,  and  more  labor  is 
performed;  but  in  the  end  a  redistribution  of  property  has 
taken  place.  Capital,  by  increasing  its  rate  of  interest,  its  rents, 
and  its  profits,  has  obtained  a  large  share  of  the  newly-created 
wealth ;  but  much  also  has  been  stored  as  the  net  savings  of 
workingmen.  These  savings  are  in  small  amounts  and  widely 
distributed,  and  the  greater  part  may  soon  be  gathered  again 
by  the  absorbing  power  of  capital ;  yet  the  distribution  has  its 
permanent  results,  and  new  owners  have  been  admitted  to  a 
share  of  the  national  wealth.  "We  cannot  estimate  the  priva- 
tions, the  suffering,  the  anguish  which  the  destruction  of  a 
great  city  inflicts  upon  its  people.  Homes  destroyed,  little  for- 
tunes, representing  years  of  frugal  living,  swept  away  in  an 
hour  of  flame ;  the  feeble  and  the  old,  the  young  and  helpless, 
the  able-bodied  and  the  strong,  alike  made  dependent  on  the 
charity  of  strangers  for  food  and  shelter ;  but  though  the  losses 
of  those  whose  property  is  thus  destroyed  may  never  be  restored 
to  them,  yet,  in  a  short  time,  the  loss  to  the  aggregate  of  national 
wealth  will  be  replaced  by  more  and  better  buildings,  and  the 
total  wealth  of  the  nation  will  be  even  greater  than  it  would 
have  been  had  no  destruction  of  property  taken  place. 

A  few  months  ago  Johnstown,  Pennsylvania,  was  carried  away 
by  flood,  and  Seattle  and  Spokane  Falls,  in  Washington,  were 
consumed  by  fire;  idle  labor,  gathered  from  a  dozen  States, 
hastened  at  once  to  repair  the  loss ;  and  it  is  probable  that,  at 
the  close  of  the  present  year,  the  wealth  of  the  nation  will  not 
be  less  than  it  would  have  been  had  neither  flood  nor  fire  oc- 
curred. Of  the  phenomena  here  described,  John  Stuart  Mill 
offers  the  following  explanation : 

"This  perpetual  consumption  and  reproduction  of  capital 


132  THE  DISTEIBUTION  OF  WEAJLTH. 

affords  the  explanation  of  what  has  so  often  excited  wonder, — 
the  great  rapidity  with  which  countries  recover  from  a  state  of 
devastation ;  the  disappearance,  in  a  short  time,  of  all  traces  of 
the  mischiefs  done  by  earthquakes,  floods,  hurricanes,  and  the 
ravages  of  war.  An  enemy  lays  waste  a  country  by  fire  and 
sword,  and  destroys  or  carries  away  nearly  all  the  movable 
wealth  existing  in  it ;  all  the  inhabitants  are  ruined,  and  yet,  in 
a  few  years  after,  everything  is  much  as  it  was  before.  The  vis 
medicatrix  naturce  has  been  a  subject  of  sterile  astonishment,  or 
has  been  cited  to  exemplify  the  wonderful  strength  of  the  prin- 
ciple of  saving  which  can  repair  such  enormous  losses  in  so 
brief  an  interval.  There  is  nothing  at  all  wonderful  in  the 
matter.  What  the  enemy  have  destroyed  would  have  been 
destroyed  in  a  little  time  by  the  inhabitants  themselves;  the 
wealth  which  they  so  rapidly  reproduce  would  have  needed  to 
be  reproduced,  and  would  have  been  reproduced  in  any  case, 
and  probably  in  as  short  a  time.  Nothing  is  changed  except 
that,  during  the  reproduction,  they  have  not  now  the  advantage 
of  consuming  what  had  been  produced  previously.  Nor  does 
this  evince  any  strength  in  the  principle  of  saving,  in  the  pop- 
ular sense  of  the  term,  since  what  takes  place  is  not  intentional 
abstinence,  but  involuntary  privation." 

Mr.  Mill  rests  his  explanation  of  the  rapid  recuperation  from 
losses  occasioned  by  general  destruction  of  property  upon  the 
supposed  fact  of  a  diminished  consumption  during  the  period 
of  recuperation.*  There  may  or  may  not  be  a  diminished 
total  consumption  during  the  period  of  recovery.  But  the  main 
cause  of  the  quick  return  to,  and  rapid  progress  beyond,  the 
former  condition  of  wealth  is  the  more  rapid  creation  of  wealth 
by  means  of  the  more  general  and  more  effective  employment 
of  labor.  The  rapid  increase  of  wealth  in  the  United  States 
during  the  years  immediately  following  our  exhausting  civil 
war  was  attended  by  no  privations ;  they  were  years  of  pros- 

*  This  enforced  economy  affords  an  adequate  explanation  of  the  recovery 
of  a  people  from  the  devastations  of  war,  of  hurricane  and  flood,  where  the 
period  of  recuperation  is  extended  over  a  considerable  space  of  time,  and 
before  the  advent  of  the  present  era  of  surplus  energy.  But  restricted  con- 
sumption is  not  the  principal  agency  to  which  must  be  referred  the  phenome- 
nally rapid  building  or  rebuilding  of  American  cities. 


THE  DISTRIBUTION   OF  WEALTH.  133 

perity  and  of  generous  consumption,  but  of  unwonted  industrial 
activity. 

The  rapid  growth  of  wealth  is  checked  not  by  an  increased 
consumption  that  keeps  pace  with  the  capacity  of  labor  to  pro- 
duce, but  by  the  limitations  of  wealth,  which,  being  approached, 
the  demand  of  capital  for  those  forms  of  durable  property  which 
can  be  made  to  yield  a  revenue  is  satisfied,  and  labor  goes  un- 
employed. Convince  capitalists  beyond  a  doubt  that  a  new 
railway  from  New  York  to  San  Francisco  would  pay  a  dividend 
of  ten  per  cent,  on  the  cost  of  construction,  and  it  will  be  but  a 
short  time  until  a  new  railway  will  be  built  and  splendidly 
equipped.  Give  satisfactory  assurance  of  a  permanent  increase 
of  profits  in  all  the  manufacturing  industries,  and  within  a  few 
years  the  product  can  be  doubled. 

The  labor  of  the  people  is  of  such  capacity  that,  if  it  could  be 
properly  combined  and  directed,  it  might,  in  a  short  period, 
construct  all  the  houses  required  for  the  comfort  of  the  people, 
and  then  double  the  number.  But  it  is  not  to  the  interest  of 
capital  to  create  that  of  which  there  is  already  enough  to  com- 
mand the  largest  revenue. 

Labor,  without  liberal  savings,  is  without  power  to  utilize 
surplus  labor  for  the  benefit  of  those  who  are  without  acquired 
capital.  To  do  so  would  impair  the  value  of  existing  invest- 
ments. To  construct  houses  for  those  who  occupy  rented 
houses,  when  there  are  already  houses  enough,  is  to  deprive  the 
landlord  of  his  tenants,  to  make  his  houses  superfluous.  Here, 
then,  arises  a  direct  conflict  between  labor  and  capital, — a  con- 
flict in  which  labor  is  perpetually  vanquished,  since  labor  can 
do  nothing  without  capital.  With  a  capacity  to  produce  far  in 
excess  of  its  wants,  labor  continues  poor  because  unable  to  con- 
trol the  machinery  by  which  wealth  is  distributed. 

The  agriculturist  produces  enough  to  supply  the  demand 
for  consumption,  yet  the  prices  he  receives  for  the  products  of 
his  labor  yield  him  little  or  no  margin  of  savings.  To  increase 
his  profits  he  increases  his  product,  only  to  find  that  a  surplus 
reduces  values,  and  his  profits  are  less  than  before. 

A  sufficient  amount  of  woollen  goods  is  manufactured  to  sup- 
ply the  demands  of  the  market.  The  worker  in  this  industry 
receives  enough  to  defray  the  expenses  of  an  economic  living 


134  THE  DISTRIBUTION   OF  WEALTH. 

for  himself  and  family,  but  not  enough  to  enable  him  to  save. 
If  the  product  be  increased,  the  price  goes  down,  and  nothing  is 
added  to  his  wages.  He  is  unable  to  accumulate ;  he  cannot 
acquire  houses  and  lands ;  he  must  continue  to  pay  rents. 

The  interests  of  labor  require  a  greater  distribution  of  wealth ; 
the  interest  of  capital  is  in  the  direction  of  the  concentration  of 
wealth.  There  being,  as  has  been  shown,  a  limit  on  the  amount 
of  wealth,  the  question  is  one  of  distribution, — what  is  owned 
by  the  few  cannot  belong  to  the  many ;  two  men  cannot  own 
the  same  thing,  and  the -creation  of  a  surplus  impairs  the  value 
of  the  whole. 

Wealth  being  a  product  of  labor,  when  the  supply  is  sufficient 
and  the  demand  for  the  products  of  labor  is  satisfied,  the  de- 
mand for  labor  is  satisfied.  Labor  competes  not  only  with  labor, 
but  with  the  products  of  labor  in  the  form  of  accumulated 
wealth.  Wealth  blocks  the  way  to  the  creation  of  new, wealth, 
and  labor  must  continue  to  pay  tribute  in  the  form  of  rents, 
interest,  and  profits.  When,  in  the  accumulation  of  national 
wealth,  a  certain  stage  has  been  reached,  and  the  demand  for 
labor  has  been  diminished  by  Competition  with  its  accumulated 
product,  the  tendency  to  lower  wages,  or  at  least  to  a  smaller 
margin  of  savings,  is  inevitable. 

Wealth  controls  production,  regulates  commerce,  and  fixes 
the  conditions  of  labor.  The  interests  of  wealth  are  not  in 
direct  conflict  with  an  increased  consumption  of  perishable 
products  by  the  workingman,  nor  with  a  demand  for  a  rate  of 
wages  sufficient  to  supply  him  with  such  part  of  the  perishable 
product  of  labor  as  he  may  consume ;  but  its  interests  are  in 
conflict  with  the  savings  of  labor,  which  must  take  the  form  of 
durable  property.  For,  when  labor  owns  its  own  dwelling  it 
pays  no  rent ;  when  it  acquires  money  it  ceases  to  pay  inter- 
est. If  its  savings  are  multiplied,  and  take  the  form  of  durable 
property, — and  there  can  be  no  considerable  savings  except  in 
the  form  of  durable  property, — ^values  of  existing  property  are 
destroyed. 

It  will  be  seen  that  an  abundance  of  wealth  in  the  hands  of  a 
few  imposes  conditions  of  hardship  on  the  many.  Wages,  values, 
as  we  are  so  often  reminded,  are  regulated  by  the  law  of  supply 
and  demand  j  but  the  law  of  supply  and  demand,  in  its  opera- 


THE  DISTRIBUTION  OF  WEALTH.  135 

tion  and  effects,  depends  upon  conditions  determined  by  the 
interests  of  accumulated  capital. 

Is  there  a  remedy  ?  None  which  is  not  in  conflict  with*  the 
interests  of  centralized  capital.  Because,  in  the  nature  of 
things,  the  remedy  must  be  chiefly  directed  not  to  the  creation 
of  more  wealth,  but  to  the  distribution  of  the  wealth  we  have, — 
to  a  reduction  of  the  tribute  which  labor  pays  to  capital. 

Wealth  and  poverty  are  correlative  conditions ;  they  are  the 
ebb  and  flow  of  the  same  tide,  the  crest  and  the  hollow  of  the 
same  wave.  The  snow  that  lies  in  drifts  along  the  hedges  was 
gathered  from  the  fields.  There  are  no  hills  without  valleys 
between. 

It  is  true  that  capital,  which  is  but  the  stored  product  of 
labor,  competes  with  capital,  and  that  labor  is  benefited  by  the 
competition.  But,  though  the  tribute  may  be  reduced,  the 
savings  of  labor  are  not  materially  increased.  Labor  requires 
food,  clothing,  and  shelter;  capital  requires  neither.  A  thou- 
sand dollars  earns  eighty  dollars  in  a  year ;  in  ten  years  it  has 
doubled.  Its  earnings  consist  of  what  it  draws  to  itself  of  the 
product  of  labor.  Capital  creates  nothing  in  the  sense  of  that 
term  as  applied  to  labor.  Money  has  no  hands,  it  builds  no  houses, 
weaves  no  cloth ;  it  handles  neither  spade,  pick,  nor  plough. 

Our  late  civil  war  withdrew  from  productive  labor  on  the 
farm,  in  the  factory,  in  the  mines,  on  railways,  and  in  the  shop 
a  million  of  men ;  yet,  with  the  labor  that  was  left,  two  magni- 
ficent armies  were  fed,  clothed,  equipped,  and  transported ;  the 
people  at  home  were  fed  and  clothed ;  houses,  mills,  and  steam- 
ships were  built,  railways  were  constructed,  and  the  wealth  of 
the  nation  continued  to  grow.  The  census  of  1870  shows  not 
only  a  greater  increase  in  proportion  to  population,  but  a  greater 
aggregate  increase  of  wealth  than  that  which  took  place  between 
the  years  1870  and  1880.  It  is  true  that  the  relative  valuation 
of  property  in  1870  was  higher  than  in  1880,  but,  adjusting 
valuations  to  the  same  standard,  the  exhibit  shows  a  marvellous 
growth  of  wealth  notwithstanding  a  destructive  and  expensive 
war. 

The  reasons  of  this  remarkable  growth  of  wealth,  under  con- 
ditions apparently  the  most  unfavorable,  were,  first,  the  unusual 
activity  of  the  productive  energies  of  the  people,  and,  second, 


336  THE  DISTEIBUTION  OP  "WEALTH. 

the  employment  of  a  greater  per  cent,  than  usual  of  the  labor 
force  of  the  country  in  the  production  of  durable  property,  such 
as  dwellings,  mills,  factories,  and  railways. 

All  this  increased  wealth  was  the  product  of  labor,  the  work 
of  hands  and  brains.  The  capital  employed  was  the  product  of 
former  labor.  The  only  creative  power  is  mind  and  muscle ; 
capital  in  itself  is  inert. 

Let  us  consider,  further,  the  causes  operating  on  the  distri- 
bution of  wealth. 

No  individual  can  himself  use  a  large  amount  of  property.  If 
each  worker  were  the  owner  of  all  the  property  used  by  himself 
and  family,  or  an  amount  of  property  equivalent  in  value,  the 
amount  which  it  would  be  possible  for  any  one  person  to  own 
would  be  comparatively  small.  If  the  common  people  all  en- 
joyed the  higher  comforts  of  our  civilization,  and  were  all 
provided  with  good  homes,  the  necessary  limit  of  property  to 
the  head  of  each  family,  under  the  conditions  named,  would 
probably  not  exceed  the  value  of  six  thousand  dollars.  But  if 
each  one  were  supplied  with  all  that  is  required  for  his  own  use, 
there  would  then  be  no  use  for  property  owned  by  any  person 
in  excess  of  wbat  he  might  require  for  use ;  and,  being  useless, 
it  would  be  without  value.  If  A  owns  one  hundred  houses,  he 
can  occupy  but  one ;  and  if  every  other  person  be  supplied  with 
a  house  of  his  own,  such  as  fills  the  measure  of  his  wants,  then 
A's  other  ninety-nine  houses,  being  without  use,  are  without 
value.  If  A  owns  a  hundred  horses,  and  can  use  but  two,  the 
other  ninety-eight  are  of  no  value,  unless  some  other  person  be 
in  need  of  horses.  It  follows,  therefore,  necessarily,  that  the 
accumulation  of  property  by  some  in  excess  of  the  amount 
required  for  their  own  use,  or,  in  other  words,  of  property  which 
derives  its  value  from  the  fact  that  it  is  used  by  other  people, 
diminishes  the  amount  of  property  which  may  be  owned  by 
others. 

If  A  owns  a  residence  worth  one  hundred  thousand  dollars, 
occupied  by  himself  and  family,  though  the  creation  of  this 
property  absorbed  a  greater  proportion  of  labor  than  what 
would  be  A's  distributive  share  if  each  person  were  awarded 
the  measure  of  his  earnings,  the  ownership  of  this  costly  resi- 
dence does  not  interfere  with  the  acquisition  of  property  by 


THE  DISTRIBUTION  OP  WEALTH.  137 

others.  The  erection  of  costly  dwellings  by  men  of  wealth 
employs  labor  and,  to  the  extent  of  the  cost  of  construction, 
distributes  values.  If  A,  being  worth  one  million  dollars, 
builds  for  himself  a  residence  worth  the  amount  of  one  hundred 
thousand  dollars,  the  cost  of  construction,  one  hundred  thou- 
sand dollars,  is  distributed  among  the  people.  A's  fortune 
remains  the  same,  but  has,  in  part,  assumed  another  form  ;  and, 
as  a  result  of  the  transaction,  the  people  have  acquired  one 
hundred  thousand  dollars  in  property  which  they  did  not  own 
before.  And  since  this  costly  residence  is  appropriated  to  A's 
own  personal  use,  and  does  not  depend  for  its  value  upon  occu- 
pancy by  persons  other  than  the  owner,  it  cannot  be  employed 
as  a  means  of  aggregating  wealth.  It  does  not  stand  in  the 
way  of  the  construction  of  dwellings  for  others.  But  the 
ownership  of  property  from  which  a  revenue  is  derived — 
property  belonging  to  one  person  and  used  by  others,  or  of 
property  in  which  capital  is  employed  at  a  profit  in  the  pro- 
duction of  articles  for  consumption — reduces  the  amount  of 
property  which  may  be  owned  by  others  in  the  amount  of  the 
value  of  the  property  so  employed.  Those  who  do  not  own  the 
property  which  they  use,  but  who  pay  tribute  to  capital  in  the 
hands  of  other  owners  by  way  of  interest  on  credits,  rents  on 
houses  or  lands,  or  profits  on  articles  of  consumption,  can  ac- 
quire property  only  by  securing  it  out  of  the  excess  in  the 
hands  of  those  who  hold  the  aggregated  capital  of  the  country  ; 
that  is,  presuming  the  limit  of  wealth  has  been  reached.  And 
if  that  limit  has  not  been  reached,  they  may  acquire  permanent 
property  out  of  the  savings  of  labor,  which  under  present  eco- 
nomic conditions  are  absorbed  by  capital,  leaving  nothing  for 
labor  as  a  whole. 

If  the  limit  of  wealth  be  reached  in  any  class  of  property,  as 
in  woollen-mills,  iron-founderies,  flouring-mills,  or  manufactories 
of  machinery,  the  same  principle  holds  good  as  to  these  classes 
of  property  ;  and  those  who  are  without  can  secure  a  part  only 
by  means  of  a  wider  distribution  of  that  which  already  exists. 

True,  when,  for  instance,  the  demand  for  woollen-mills  has 
been  supplied,  more  woollen-mills  may  be  erected,  if  capital  can 
be  diverted  to  such  purpose;  but  the  effect  is  a  destruction 
and  distribution  of  values,  and  not  an  increase  of  the  nation's 


138  THE  DISTEIBUTION  OP  WEALTH. 

wealth.  This  form  of  distribution,  by  means  of  the  creation  of 
a  surplus  of  a  certain  kind  of  property,  an  excess  beyond  the 
demand,  destroys  values  and  reduces  the  total  wealth. 

Distribution  in  this  manner  is  restrained  by  the  fact  that  the 
creation  of  a  surplus  rapidly  diminishes  the  value  of  the  whole, 
and,  the  effect  soon  becoming  apparent,  capital  avoids 
destructive  competition. 

If  there  were  enough  and  no  more  than  enough  of  woollen- 
mills  to  supply  the  demand  for  woollen  fabrics,  and  the  owner- 
ship were  distributed  among  all  the  employes  who  operate  them 
in  proportion  to  the  labor  and  skill  of  each,  so  that  each  em- 
ploye would  in  effect  use  his  own  property,  or  would  own  an 
equivalent  of  the  property  used  by  him,  this  would  be  such  dis- 
tribution as  would  give  to  each  worker  the  entire  product  of  his 
labor;  while  the  indefinite  increase  of  the  number  of  mills 
would  destroy  the  value  of  both  capital  and  labor  employed 
in  that  industry.  It  will  be  seen,  therefore,  that  an  enforced 
distribution  by  means  of  that  excessive  competition  which  de- 
stroys values  is  not  to  be  desired,  even  if  it  were  practicable. 
Distribution  by  such  means  is,  however,  impossible.  What  is 
needed,  and  that  which  alone  is  attainable,  is  not  more  mills, 
more  furnaces,  more  railways,  when  there  are  already  enough, 
but  a  distribution  of  the  ownership  of  the  wealth  we  have. 

The  quantity  of  product  may  be  increased  to  the  full  measure 
of  the  demand,  but  an  increase  beyond  that  point  is  not  only  a 
waste  of  labor,  but  a  destruction  of  existing  values.  The  con- 
sequence would  be  a  general  derangement  of  values,  panics, 
hard  times ;  the  weak  would  succumb  to  the  pressure,  and  the 
end  would  be  an  increased  aggregation  of  wealth  in  the  hands 
of  those  strong  enough  to  break  down  weaker  competitors  and 
control  markets. 

Competition  in  any  one  industry  tends  to  bring  prices  of 
labor  and  of  the  products  of  labor  to  the  general  level  of  prices 
in  other  industries.  But  excessive  competition  forces  prices 
below  the  normal  standard,  first  in  one  industry  and  then  in 
another,  to  the  disadvantage  of  all,  except  it  be  the  creditor 
classes,  whose  dollars  grow  large  as  values  grow  small. 

Any  policy  which  tends  to  cheapen  the  price  of  the  products 
of  labor  in  general  is  detrimental  to  the  people,  for  the  reason 


THE  DISTRIBUTION  OP  WEALTH.  139 

that  it  increases  the  value  of  credits.  The  true  policy  for  the 
general  good  is  that  which  promotes  high  prices  for  labor  and 
its  products  in  all  departments  of  industry  and  yet  tends  to  an 
equitable  equalization  of  values  among  all  industries,  having 
due  regard  to  quality  of  labor  and  skill  employed. 

It  is  true  that  a  generation  hence  the  greater  portion  of 
durable  property  in  its  existing  forms  will  have  been  consumed 
by  use  or  wasted  by  decay.  And  it  may  be  urged  that  this 
process  of  continual  consumption  opens  the  way  for  an  equitable 
distribution  of  property.  But,  in  answer,  it  is  sufficient  to  say 
that  revenue-bearing  property  perpetuates  itself.  New  forms 
of  wealth,  which  take  the  place  of  the  old,  represent  only  a  part 
of  the  revenues  derived  from  the  property  which  they  replace. 
So  far  as  involved  in  the  question  which  we  have  been  consider- 
ing, durable  property  may  be  regarded  as  though  subject  to 
neither  wear  nor  decay. 

Lavish  expenditures  of  the  wealthy  in  the  erection  of  splendid 
palaces,  or  in  the  construction  of  steam-yachts,  or  for  costly 
equipages,  blooded  horses,  diamonds,  paintings,  statuary,  ser- 
vants in  livery,  or  any  object  of  personal  comfort,  or  the  gratifi- 
cation of  extravagant  tastes,  are  not  always  to  be  condemned 
as  detrimental  to  the  interests  of  labor.  Such  expenditures 
constitute  an  important  agency  in  the  distribution  of  wealth. 
They  afford  to  labor  the  opportunity  to  reclaim  what  labor 
has  lost. 

Palaces  for  the  wealthy  may  represent  unjust  gains ;  but  they 
also  represent  so  much  wealth  distributed  among  the  people,  so 
much  reduction  in  the  amount  of  revenue-bearing  property. 
The  costly  mansion  may  overshadow,  but  it  does  not  compete 
with,  the  cottages  of  the  poor. 

It  is  the  tenement-house  and  the  rented  flat  that  hold  the 
laborer  in  bondage  and  deny  him  a  home  of  his  own.  It  is  not 
the  rich  prodigal,  but  the  man  of  business  that  absorbs  the  earn- 
ings of  labor  and  obstructs  the  way  to  prosperity.  The  rich 
young  spendthrift  may  set  a  bad.  example  in  morals;  he  may 
bring  grief  to  fond  parents ;  and  yet  to  the  people  he  may  be  a 
blessing  in  disguise.  As  an  agent  in  the  distribution  of  wealth 
he  is  often  an  important  and  useful  factor.  In  utter  disregard 
of  Dr.  Franklin's  frugal  maxims,  he  tears  down  the  mountain  of 


140  THE  DISTKIBIJTION  OF  WEALTH. 

wealth  piled  up  by  his  worthy  ancestors,  and  scatters  the  golden 
coin  among  the  crowd  of  scrambling  poor. 

No  enterprise,  no  business,  can  be  established  without  the  aid 
of  capital,  without  paying  tribute  to  capital.  In  any  manu- 
facturing industry,  before  a  beginning  can  be  made  there  must  be 
expensive  buildings,  costly  machinery,  and  money  at  command 
to  pay  numerous  employes.  Capital  exacts  its  tribute  j  and  the 
man  who  attempts  to  establish  himself  in  any  business  cannot 
rely  with  confidence  on  success.  If  he  add  his  own  accumula- 
tions to  the  capital  of  others,  he  incurs  the  serious  risk  of  seeing 
his  own  savings  swallowed  up  in  rents,  interest,  and  the  losses 
occasioned  by  fluctuating  values.  Speculation  is  an  element  in 
every  business.  Every  enterprise  is  directed,  managed,  and 
controlled  in  the  interests  of  capital.  Labor  cannot  organize 
except  under  the  control  of  capital.  For  the  privilege  of  exist- 
ing, labor  must  pay  tribute  to  aggregated  wealth.  Wealth,  it  is 
true,  cannot  exist  without  labor,  since  all  wealth  is  created  by 
labor;  but  wealth,  when  created,  becomes  the  proprietor  of 
labor,  the  monarch  of  muscle,  a  king  beneath  whose  golden 
sceptre  toiling  millions  bow  and  cringe.  But  while  they  sweat 
and  toil,  they  grow  weary  of  a  king  who  considers  only  the 
splendor  of  his  court  and  the  garnered  wealth  in  the  vaults  of 
his  royal  treasury.  The  lords  of  wealth,  who  have  been  knighted 
by  the  touch  of  his  royal  wand,  are  loud  in  their  praises  of  the 
king ;  but  the  millions  whose  faces  are  bronzed,  and  whose 
hands  are  hard,  often  complain  of  the  heavy  tithings,  and  mur- 
mur of  the  injustice  of  a  king  so  preoc(5upied  with  the  splendor 
of  his  retinue  and  the  grandeur  of  his  palace  that  his  royal 
mind  is  little  concerned  for  the  cottages  of  the  poor. 

The  people  demand  a  charter  of  King  John.  They  do  not 
seek  to  uncrown  him,  they  do  not  clamor  for  a  new  king,  but 
they  ask  for  some  limitations  on  his  royal  prerogative.  They 
have  been  too  long  deluded  with  the  stale  old  maxim  that  prices 
are  regulated  by  the  law  of  supply  and  demand.  They  have 
found  this  law,  under  present  changed  conditions,  wholly  inade- 
quate to  reduce  inequalities  of  opportunity  and  secure  to  them 
the  earnings  of  their  toil. 

During  a  recent  period  the  entire  country  has  been  covered 
with  a  net-work  of  railways ;  splendid  cities  have  sprung  up ; 


THE  DISTBIBUTION  OP  WEALTH.  141 

and  of  factories,  furnaces,  and  mills  the  supply  outruns  the  de- 
mand ;  agriculture  has  doubled  its  product;  magnificent  churches 
and  splendid  palaces  everywhere  attest  the  overflowing  abun- 
dance of  wealth ;  and  yet  millions  still  abide  in  rented  cottages 
or  huddle  together  in  crowded  tenements;  many  are  idle  for 
want  of  work,  and  many  are  hungry  and  meanly  clad. 

If  labor  could  be  utilized,  if  it  could  be  combined  and  di- 
rected, its  capacity  is  not  only  sufficient  to  feed  and  clothe  the 
people,  but  within  a  short  period  to  furnish  every  family  with 
a  home  of  its  own.  But  money  is  required  to  put  labor  in 
motion,  and  money  cannot  be  commanded,  for  capital  cannot 
afford  to  destroy  itself. 

The  problem  is  not  now  how  to  increase  the  effective  power 
of  labor, — that  problem  has  been  solved, — but  how  to  employ 
labor  so  as  to  secure  to  every  one  the  opportunity  to  work  and 
to  enjoy  the  product  of  his  toil. 

In  the  pursuit  of  this  object  it  is  evident  that,  without  in 
some  manner  modifying  the  tendency  of  wealth  to  accumulate 
in  the  hands  of  a  few,  but  little  can  be  accomplished. 

Mr.  Carnegie  has  said  that  the  contrast  between  the  palace 
of  the  millionaire  and  the  cottage  of  the  laborer  measures  the 
change  which  has  come  with  civilization.  Does  it  not  also 
suggest  the  change  which  is  yet  to  come  ? 

There  must  be  some  abatement  of  the  tribute  which  labor 
pays  to  hoarded  wealth.  The  workingman  is  deprived  of  the 
product  of  his  industry ;  his  savings  are  taken  from  him.  He 
sees  men  in  the  possession  of  fortunes  measured  by  millions 
which  he  knows  they  never  earned,  but  which  they  are  said  to 
have  acquired  according  to  the  time-honored  usages  of  trade 
that  are  vouched  for  by  all  the  professors  of  political  science  as 
in  full  accord  with  the  laws  of  progress  and  of  civilization.  He 
is  assured  that  the  drawing  is  perfectly  fair,  "  conducted  in  the 
presence  of  honorable  gentlemen;"  but  he  observes  that  the 
managers  of  the  lottery  of  distribution  have  grown  wealthy, 
while  he  has  remained  poor. 

What  can  be  done  to  secure  to  each  worker  a  fairer  measure 
of  reward  for  his  industry  ?  Arbitrary  distributions  of  wealth 
are  of  course  impracticable,  and,  if  attempted,  they  would  afford 
no  remedy. 


142  THE  DISTRIBUTION  OP  WEALTH. 

The  same  forces  continuing  to  operate,  the  same  results  would 
be  repeated,  and  soon  a  second  distribution  would  be  required. 
The  people  would  lose  all  incentive  to  industry  and  economy. 
The  right  of  each  to  the  product  of  his  own  labor  would  cease 
to  be  respected,  and  an  utter  demoralization  of  industry  would 
ensue. 

The  remedy  must  be  sought  in  restraints  on  the  power  of 
capital  to  absorb  the  earnings  of  the  worker,  and  there  must  be 
such  readjustment  of  economic  forces  as  will  equalize  opportu- 
nities and  give  full  play  to  the  productive  power  of  labor.  The 
remedy  must  not  ignore  fundamental  laws  of  trade,  but  make 
use  of  them;  it  must  not  destroy  the  incentive  to  the  acqui- 
sition of  property,  but  extend  the  opportunity  to  acquire  a 
share  of  wealth  to  a  greater  number.  In  seeking  a  wider 
distribution,  it  must  guard  against  the  destruction  of  values; 
it  must  proceed  on  general  principles  along  well-defined 
lines. 

.  The  value,  the  necessity  of  very  considerable  accumulations 
of  wealth  must  be  fully  recognized.  In  many  industries  large 
capital  is  essential  to  economic  production.  Great  enterprises 
are  not  accomplished  without  those  combinations  of  capital 
which  are  impracticable  among  a  people  where  there  are  no 
persons  of  wealth.  Social  refinement,  moral  and  intellectual 
culture,  are  the  growth  of  leisure  and  opportunity,  and  no  class 
of  persons  are  more  essential  to  the  moral,  social,  and  industrial 
Welfare  of  a  people  than  those  possessing  fortunes  adequate  to 
the  demands  of  the  highest  culture.  But  accumulations  of 
wealth  beyond  reasonable  limit  impose  burdens  upon  the  people 
without  corresponding  benefits.  When  centred  in  the  fortunes  of 
a  few,  society  is  deprived  of  the  advantages  which  constitute 
the  justification  of  wealth. 

Extreme  centralization  of  wealth  is  responsible  for  the  spirit 
of  communism  and  vulgar  class  antipathy  now  manifested  by 
large  numbers  of  people  in  both  Europe  and  the  United  States ; 
and,  unless  we  are  ready  to  deal  with  still  graver  evils,  it  were 
best  to  make  speed  in  correcting  those  which  give  rise  to  the 
prevailing  spirit  of  discontent. 

I  shall  in  other  chapters  set  forth  such  remedies  as  I  believe 
to  be  efficient  and  practicable,  at  least  in  great  measure,  to  re- 


THE  DISTRIBUTION   OF  WEALTH.  143 

move  those  causes  which  hinder  the  working-people  from  reach- 
ing that  condition  of  independent  thrift  which,  considering  the 
present  productive  power  of  labor,  I  believe  to  be  attainable. 


CHAPTEE  Y. 

SAVING — CREDITS. 


The  suggestion  is  often  made  that  the  poverty  of  the  poorer 
classes  is  attributable  chiefly  to  their  own  improvidence  and 
wastefulness,  and  that,  if  each  would  habitually  save  a  small 
portion  of  his  earnings,  all  might  accumulate  wealth.  Let  us 
inquire  if  this  be  true. 

By  saving,  as  that  term  is  commonly  understood,  is  meant  a 
diminished  consumption.  What  are  the  effects  of  saving,  in 
this  restricted  sense  of  the  term,  upon  the  accumulation  and 
distribution  of  wealth  ? 

Consumption  treads  close  upon  the  heels  of  production. 
Whatever  is  produced,  to  be  of  value,  must  be  consumed,  either 
in  the  form  of  food,  clothing,  fuel,  and  the  like,  or  in  furniture, 
dwellings,  and  other  durable  property.  The  question  is,  there- 
fore, not  how  much  the  people  shall  consume,  but  in  what  form 
the  product  of  labor  shall  be  consumed.  Shall  they  eat  it,  wear 
it  out  in  clothing,  or  build  houses  to  live  in  ?  "  Do  neither," 
says  the  strict  economist ;  "  sell  it  and  save  the  money."  By 
this  is  meant,  let  some  other  fellow  eat  it,  and  give  you  his 
money  or  his  note.  But  where  is  the  other  fellow?  Our  free- 
trade  friends  tell  us  that  he  works  in  a  factory  across  the  sea ; 
and  our  worthy  Secretary  of  State  insists  that  he  is  lolling  in 
the  sun  down  in  Mexico  or  South  America.  And  we  are  told 
that  all  we  need,  in  order  to  accumulate  wealth,  is  to  open  our 
ports  and  send  our  ships  abroad  laden  with  the  surplus  products 
of  our  labor.  We  must  seek  a  foreign  market.  But  when  we 
find  the  Englishman  or  Frenchman  or  Spanish- American  we  are 
looking  for,  it  is  altogether  probable  that,  instead  of  paying  good 
hard  cash  for  the  products  of  our  labor,  he  will  insist  on  swap- 


144  THE  DISTRIBUTION  OF  WEALTH. 

ping  either  food  or  clothing,  which  we  shall  be  compelled  to  eat 
or  to  wear  out,  and  there  will  be  nothing  saved  after  all. 

The  capacity  of  labor  to  produce  is  at  present  greatly  in 
excess  of  consumption.  If  all  the  labor  and  machinery  in 
the  various  industries  of  the  country  were  steadily  employed 
throughout  the  entire  year,  the  surplus  product  for  which,  at 
the  present  rate  of  consumption,  there  could  be  no  demand 
would  be  very  large.  This  is  especially  true  in  the  manufactur- 
ing industries.  Hence  arises  the  incessant  competition  among 
producers  for  a  larger  share  of  the  market. 

If  the  entire  labor  in  any  one  industry  of  the  country  be  all 
the  time  effectively  employed,  the  product  chokes  the  market. 
If  a  portion  of  the  workers  be  for  a  time  withdrawn  from 
production,  while  others  continue  steadily  employed  supplying 
the  market  with  the  products  of  their  labor  and  deriving  what- 
ever advantage  may  result  from  the  withdrawal  of  other  labor 
from  competition,  the  workers  out  of  employment,  pressed  by 
necessity,  soon  return  to  a  fiercer  competition.  Thus  it  is 
that,  in  order  to  secure  their  due  proportion  of  employment  and 
of  the  product  of  labor,  the  whole  body  of  working-people  are 
constantly  striving  against  each  other  in  heated  competition, 
while  they  are  unable  to  maintain  prices  by  means  of  such  com- 
binations as  enable  capital  to  maintain  its  margin  of  profits.  If 
consumption  always  kept  pace  with  production,  a  glut  in  the 
market  could  never  occur.  But  when  people  attempt  to  save  in 
the  form  of  money  or  credits ;  when,  in  other  words,  they  put 
into  the  market  more  than  they  take  out,  products  accumulate, 
production  outruns  consumption,  prices  are  deranged,  distribu- 
tion is  interrupted,  and  the  demand  for  labor  ceases,  until,  by 
enforced  idleness,  production  falls  within  the  limits  of  the 
demands  of  trade. 

There  is  not  a  uniform  distribution  of  labor  nor  of  the 
products  of  labor  among  the  working-people.  Some  are  em- 
ployed the  year  round,  while  others  may  be  idle  half  the  time. 
The  result  is  that,  notwithstanding  the  capacity  of  labor  to 
produce  more  than  is  wanted,  there  is  always  much  individual 
distress.  Owing  to  excessive  competition,  the  savings  of  labor 
which  take  the  form  of  durable  property  are  absorbed  by  capi- 
tal, the  laborer  shifts  from  place  to  place  and  lives  in  rented 


THE  DISTRIBUTION  OF   WEAXTH.  145 

houses,  and  the  mortgage  which  aggregated  wealth  holds  on 
his  muscle  and  his  brain  grows  and  grows.  It  never  can  be 
paid  off,  extinguished,  or  evaded. 

The  uncertainty  of  permanent  employment  at  any  one  place, 
or  at  steady  wages,  greatly  hinders,  when  it  does  not  wholly 
prevent,  the  acquisition  of  homes  by  workingmen,  and  opens  to 
capital  the  opportunity  for  investment  in  the  homes  of  the 
poor. 

Saving,  in  the  form  of  money,  means  deferred  consumption. 
If,  for  instance,  in  the  course  of  a  year  A  saves  one  hundred 
dollars,  he  has  put  into  the  market  one  hundred  dollars'  worth 
of  the  product  of  labor  more  than  he  has  taken  out,  while 
others  have  consumed  that  much  in  excess  of  their  earnings,  in 
excess  of  their  contribution  to  the  market.  A's  savings,  in  this 
form,  measure  an  excess  of  consumption  over  production  by 
other  persons.  It  will  be  seen,  therefore,  that  all  persons  cannot 
save  at  the  same  time,  and  that  the  total  savings,  in  the  form  of 
money,  are  limited  to  a  small  aggregate.  These  accumulations 
must  be  constantly  converted  into  other  forms  of  property  ;  if 
into  food  or  clothing  or  other  perishable  property,  no  permanent 
saving  is  effected.  Accumulations  of  wealth  are  represented  by 
property  of  more  durable  character.  Durable  property  consists 
mostly  of  articles  of  considerable  value.  The  small  accumula- 
tions of  money  savings  which  represent  only  suspended  con- 
sumption, and  which  are,  in  the  nature  of  things,  possible  to 
any  considerable  number  of  workers,  are  in  amount  too  small  to 
pay  for  the  building  of  houses  or  the  purchase  of  machinery,  or 
even  of  valuable  furniture  ;  and  for  this  reason  such  savings  are 
less  liable  to  be  invested  in  any  form  of  durable  property,  but 
are  expended  for  articles  of  perishable  nature,  for  the  purchase 
of  which  small  sums  are  available. 

A  general  effort  on  the  part  of  the  people  to  save,  in  the  form 
of  money  or  of  credits,  means  a  general  refraining  from  the 
purchase  of  the  products  of  labor.  To  the  extent  that  the  effort 
succeeds,  it  means  that  the  people  have  quit  work.  This  form 
of  saving,  therefore,  defeats  itself.  The  only  form  of  saving 
practicable  to  the  people  at  large  consists  in  the  conversion  of 
money  savings  into  the  forms  of  durable  wealth.  Saving,  in  the 
true  sense  of  that  term,  is  that  form  of  expenditure  by  which 

10 


146  THE  DISTRIBUTION  OF  WEALTH. 

the  wages  of  labor  are  converted  into  property  that  is  both 
useful  and  durable.  The  other  form  of  saving,  by  which  the 
individual  may  profit  at  the  expense  of  his  fellow-workers,  con- 
sists in  contributing  the  products  of  labor  to  the  common  mar- 
ket, and  refusing  to  accept  the  products  of  other  labor  in  ex^ 
change,  but  storing  up  wages  in  money  and  then  in  credits,  not 
for  the  purpose  of  a  consumption  reasonably  deferred,  that  it 
may  take  the  form  of  expenditure  for  durable  property,  but 
that,  by  means  of  interest,  it  may  grow  into  a  future  claim  for 
a  larger  share  of  the  products  of  labor  than  its  present 
equivalent. 

The  total  consumption  of  a  people  must  be  the  equivalent  of 
the  total  production ;  while  the  production  and  consumption  of 
an  individual  member  of  society  may  greatly  vary.  To  balance 
the  sum  of  the  accounts  of  all  the  individuals  of  a  nation  who 
contribute  to  one  common  market,  so  that  the  column  which 
represents  consumption  will  foot  up  the  same  amount  as  the 
column  which  represents  production,  requires  that  the  industries 
in  their  several  classes,  as  well  as  production  in  its  individual 
subdivisions,  by  means  of  ever-varying  quantities  and  fluctuating 
prices,  shall  so  adjust  themselves  as  to  reduce  the  grand  totals 
to  equivalent  amounts. 

Industrial  disturbances  are  in  great  measure  attributable  to 
competition  in  saving,  using  the  term  in  its  limited  sense. 
Production  and  consumption  must  move  together;  when  one 
halts  the  other  must  stand  still.  Industrial  harmony  requires 
that  they  keep  step  and  move  at  a  steady,  unbroken  pace. 

Since  articles  of  food  and  clothing  cannot  be  stored  for  any 
great  length  of  time,  each  year's  production  must  provide  for 
each  year's  consumption ;  and  wealth,  beyond  the  amount  of 
perishable  products  required  for  consumption  within  the  limits 
of  a  short  period,  must  be  stored  in  the  form  of  houses,  mills, 
railways,  machinery,  tools,  and  other  like  products.  The  title 
to  wealth,  however,  or  to  the  products  of  labor,  may  exist  in 
the  form  of  credits,  and  credits  may  accumulate  to  the  amount 
of  one-third  or  more  of  the  aggregate  wealth  of  a  country. 

"Wealth  cannot  be  hoarded  to  any  great  extent  in  the  form  of 
money,  for  the  total  amount  of  the  money  in  the  country  does 
not  exceed  one-fortieth  part  of  the  nation's  wealth,  and  what 


THE  DISTRIBUTION  OF   WEALTH.  147 

there  is  is  required  for  use  in  effecting  exchanges.  Wealth 
saved  usually  remains  in  the  form  of  money  only  during  that 
short  period  which  intervenes  before  it  takes  the  form  of  other 
property,  or  the  form  of  credit.  The  hoarding  of  money  causes 
an  interruption  of  exchange  and  a  disturbance  of  values. 

It  is  evident,  therefore,  that,  while  one  individual  may  pro- 
vide for  his  own  future  wants  by  the  acquisition  of  property  or 
of  credits,  a  whole  people  cannot  so  provide.  The  accumula- 
tions of  the  wealthy  represent  the  power  of  a  certain  number 
of  persons,  necessarily  limited,  to  command  the  products  of  the 
labor  of  other  persons.  Production  must  go  on ;  the  people 
must  each  year  create  that  which  they  that  year  consume. 
One  man  may  acquire  a  fortune  by  saving ;  but  fortunes  are 
possible  only  to  a  few. 

Savings  beyond  those  accumulations  necessary  to  provide 
property  actually  used  by  the  owner  and  his  family  are  repre- 
sented in  rented  houses,  mills,  or  railways,  the  rents  or  profits 
of  which  command  a  portion  of  the  products  of  other  men's 
labor.  It  is  from  the  nature  of  things  impossible  that  the  mass 
of  the  people  should  store  up  wealth  for  future  consumption. 
They  may  acquire  good  homes,  good  churches,  good  roads,  and 
such  other  durable  property  as  they  may  need  or  desire  for  use  ; 
but  food  and  clothing  they  must  produce  as  they  consume. 

The  total  savings  of  the  entire  people  are  represented  in  the 
durable  property  which  they  use  and  that  portion  of  the  annual 
product  on  hand  for  consumption.  The  margin  of  savings  is 
fixed  within  natural  and  somewhat  narrow  limits,  and  it  follows 
that  the  greater  the  amount  of  savings  which  fall  to  the  share 
of  a  few,  the  smaller  the  amount  which  is  left  for  those  who 
remain. 

The  wages  of  the  laboring  man  are,  by  unchangeable  natural 
law,  limited  to  a  sum  but  little  in  excess  of  the  cost  of  food  and 
clothing  for  himself  and  family,  and  that  excess  is  measured  by 
the  additional  cost  of  his  dwelling,  furniture,  household  utensils, 
and  tools. 

Could  there  be  a  storage  of  articles  of  food  and  clothing, 
wages  might  be  temporarily  increased,  but  would  then  vibrate 
as  far  the  other  way,  since  the  limit  of  consumption,  and  not  of 
the  powers  of  production,  determines  the  limit  of  wages. 


148  THE  DISTRIBUTION   OF   WEALTH. 

Political  economists  have  indulged  in  elaborate  metaphysical 
disquisitions  on  "  what  determines  the  rate  of  wages."  Were  I 
required  to  give  a  short  answer  to  this  question,  I  should  say 
the  human  stomach;  but,  if  permitted  a  little  more  space,  I 
should  add,  the  intensity  of  the  prevailing  desire  for  the  luxuries 
of  life. 

When  one  portion  of  the  people  spend  less — that  is,  consume 
less — than  they  produce,  less  than  their  relative  proportion  of  the 
total  consumption,  other  people  must  consume  more  than  they 
produce.  In  this  manner,  that  part  of  the  people  who  consume 
less  than  they  produce  draw  to  themselves  the  durable  property 
of  the  country.  They  are  thrifty  at  the  expense,  and  often  to 
the  detriment,  of  the  laboring-classes  at  large. 

This  is  the  principle  involved  in  the  objection  to  the  importa- 
tion of  Chinese  into  this  country,  and  also  to  the  immigration 
of  a  class  of  Europeans  who  are  industrious  producers  but  more 
meagre  consumers  than  the  American  people.  And  on  this 
principle  rests  one  of  the  chief  objections  to  unrestricted  com- 
merce with  foreign  nations. 

The  standard  of  wages  is  gauged  by  the  average  consumption 
of  the  whole  people  who  compete  in  a  common  market.  While 
for  each  individual,  on  the  principle  of  getting  the  best  of  a 
bargain,  it  may  be  a  wise  policy,  as  a  competitor  against  his 
fellows,  to  save  all  he  can ;  yet  excessive  savings,  and  resultant 
accumulations  of  credits,  or  of  revenue-bearing  property,  which 
operate  in  like  manner,  are  possible  only  to  a  relatively  small 
number  of  people,  and  are  an  injury  to  the  people  at  large, 
except  that  they  confer  certain  compensating  benefits  elsewhere 
considered. 

The  consumption  of  different  orders  of  industrial  people  varies 
greatly,  and  there  is  consequently  a  corresponding  variation  in 
the  wages,  or,  what  is  the  same,  the  prices  of  the  products  of 
the  labor  of  these  different  orders.  This  is  not  necessarily 
detrimental  to  society,  since  a  relatively  large  amount  of  savings 
may  be  left  to  each.  But  high  wages  for  one  class  of  workers 
which  result  in  accumulations  of  durable  property  to  that  class 
greater  than  an  equitable  proportion  of  the  permanent  wealth 
of  the  whole  people  are  detrimental  to  the  interests  of  other 
laboring-classes,  who  are  thereby  necessarily  deprived  of  the 


THE  DISTRIBUTION  OF  WEALTH.  149 

acquisitions  to  which  they  are  entitled.     Undue  compensation 
to  one  class  means  a  corresponding  loss  to  other  classes. 

It  is  therefore  not  to  the  interest  of  the  people  to  sustain  a 
disproportionately  high  rate  of  wages  to  any  one  industrial 
class.  A  high  standard  of  wages  in  general  is  to  be  desired,  as 
by  this  means  the  share  of  capital  is  diminished;  but,  since  the 
total  wages  must  fall  within  the  limits  of  the  total  consumption, 
the  wages  of  each  class  should  bear  an  equitable  relation  to  the 
wages  of  every  other  class.  Too  high  wages  to  one  class  mean 
too  low  wages  to  another  class.  Wages  in  skilled  industries  are 
high ;  but  the  consumption  of  skilled  workmen  and  their  fami- 
lies, as  a  rule,  is  relatively  large.  The  savings  of  skilled  work- 
men also  are  larger;  but  this  class  of  workers  occupy  more 
costly  dwellings,  and  use  more  expensive  articles  of  durable 
property,  and  their  savings  in  the  form  of  credits  are  not  ex- 
cessive. The  surplus  which  they  are  enabled  to  store  up  for 
sickness  or  old  age  does  not,  perhaps,  go  further  than  the  surplus 
saved  by  the  average  laborer.  Such  at  least  is  the  relation 
which  the  industries  ought  to  bear  towards  each  other  in  a 
healthy  social  economy. 

To  illustrate  the  effect  of  savings,  as  well  as  the  effect  of  in- 
terest accumulations,  on  the  distribution  of  wealth,  let  us  sup- 
pose the  existence  of  an  island,  disconnected  from  all  other 
communities,  and  therefore  without  foreign  trade  or  exterior 
influence  of  any  kind  to  affect  the  growth  or  distribution  of 
wealth.  To  eliminate  every  element  not  essential  to  the  illus- 
tration, we  will  assume  the  existence  of  conditions  wholly  im- 
possible in  any  existing  community,  because  of  differences  in 
intellectual  capacity,  physical  power,  the  accidents  of  disease, 
the  uncertainty  of  the  seasons,  and  the  eager  graspings  of 
avarice. 

This  island,  we  will  suppose,  contains  eight  hundred  and  one 
thousand  acres  of  land,  the  soil  of  which  is  of  uniform  fertility, 
one  locality  affording  no  advantage  over  another.  Eight  hun- 
dred thousand  acres  is  divided  into  five  thousand  farms  of  one 
hundred  and  sixty  acres  each.  The  remaining  one  thousand 
acres  are  occupied  by  the  houses,  shops,  and  mills  of  mechanics, 
artisans,  and  professional  men.  There  are  fifty  thousand  people 
divided  into  ten  thousand  families  of  five  persons  to  each  family. 


150  THE  DISTEIBUTION   OF  WEALTH. 

There  is  one  laborer  or  worker  to  each  family,  who  engages  in 
productive  industry, — that  is,  in  producing  those  things  which 
enter  into  the  common  market.  The  other  members  of  the 
family  devote  their  time  to  domestic  service,  education,  and  the 
creation  for  home  consumption  of  such  products  as  are  not 
bought  and  sold  in  the  market.  The  annual  product  of  each 
worker  is  equivalent  to  the  annual  product  of  every  other 
worker.  There  are  five  thousand  agricultural  families,  and  five 
thousand  mechanics,  artisans,  clerks,  manufacturers,  merchants, 
and  professional  men.  Each  farm  of  one  hundred  and  sixty 
acres  is  valued  at  four  thousand  eight  hundred  dollars,  and  each 
agriculturist  owns,  besides,  one  thousand  dollars'  worth  of  other 
property,  making  a  total  of  five  thousand  eight  hundred  dollars. 
Each  mechanic,  artisan,  etc.,  owns  an  equal  amount,  invested  in 
a  home,  machinery,  tools,  implements  of  trade,  and  other  per- 
sonal property.  The  total  amount  of  the  money  of  the  country 
is  one  million  dollars,  which  is  equally  divided  among  the  ten 
thousand  families,  making  one  hundred  dollars  to  each  family, 
which  amount  is  embraced  in  the  total  of  five  thousand  eight 
hundred  dollars  owned  by  each  family,  as  stated  above.  The 
total  product  each  year,  embracing  products  of  agriculture  and 
additions  to,  and  improvements  on,  buildings,  machinery,  etc., 
is  ten  million  dollars,  or  one  thousand  dollars  to  each  family. 
Each  family  consumes,  each  year,  an  equal  amount  of  the  prod- 
ucts of  labor,  and  requires  an  equal  amount  of  professional 
service.  The  production  and  consumption  of  each  family  being 
equal,  there  is  neither  increase  nor  diminution  of  wealth.  The 
community  has  reached  that  stage  of  development  where  every 
family  is  supplied  with  all  the  property  requisite  to  satisfy  its 
wants;  where  no  improvement  or  addition  is  needed  beyond 
keeping  property  in  repair  and  supplying  the  place  of  that 
which  wears  out.  The  population  neither  increases  nor  dimin- 
ishes. The  total  wealth  of  the  island  will  therefore  remain 
fixed  at  fifty-eight  million  dollars. 

We  will  now  suppose  that  out  of  the  ten  thousand  workers 
there  are  one  hundred  persons  by  the  name  of  Smith,  who  con- 
ceive the  idea  of  increasing  their  wealth  beyond  that  of  their 
neighbors.  Since  the  demands  of  the  people,  as  a  whole,  for 
wealth  are  fully  satisfied,  the  aggregate  wealth  cannot  be  in- 


THE  DISTRIBUTION  OP   WEALTH.  151 

creased.  The  people  have  no  use  for  more  property,  and  there 
is  therefore  no  demand  for  more  labor.  But  the  Smiths  conceive 
the  idea  of  acquisition  by  saving,  by  consuming  less  than  they 
have  hitherto  consumed.  They  discover  that,  instead  of  ex- 
pending one  thousand  dollars  per  year,  they  are  able  to  subsist 
comfortably  on  eight  hundred  dollars  per  year.  As  the  products 
of  all  labor  go  into  and,  as  required  for  consumption,  are  pur- 
chased from  the  same  market,  the  Smiths  continue  to  produce, 
as  before,  to  the  amount  of  one  thousand  dollars  per  year.  The 
product  of  their  labor  is  disposed  of  at  the  usual  rates  in  the 
market,  and  they  consequently  receive  during  the  year  one 
thousand  dollars,  and  the  product  of  their  labor  is  consumed  as 
a  part  of  the  whole.  At  the  end  of  the  year,  Smith  finds  that, 
instead  of  one  hundred  dollars  in  money  with  which  he  began, 
he  has  three  hundred  dollars,  having  consumed  two  hundred 
dollars  less  than  the  amount  he  received  for  the  product  of  his 
labor.  As  each  of  the  one  hundred  families  of  Smiths  consumes 
two  hundred  dollars  less  per  annum,  the  total  consumption  falls 
off  twenty  thousand  dollars  in  amount ;  and  in  order  to  make 
production  and  consumption  equal,  the  remaining  nine  thousand 
nine  hundred  families  are  compelled  to  reduce  the  product  of 
their  labor  to  the  limit  of  consumption  or  demand,  or  to  nine 
hundred  and  ninety-two  dollars  per  annum.  If  we  suppose 
them  to  continue  to  produce,  as  before,  one  thousand  dollars 
each,  the  supply  each  year  would  exceed  the  demand  in  the 
amount  of  twenty  thousand  dollars,  thus  disarranging  the  mar- 
ket. Supply  and  demand,  or  production  and  consumption,  will 
always  reach  an  equilibrium  by  the  increase  of  the  one  or  the 
reduction  of  the  other.  For  the  purpose  of  this  illustration  it 
is  not  material  by  which  method  we  assume  the  equilibrium  to 
be  reached. 

The  Smith  families  begin  the  process  of  saving  by  consuming 
less  than  the  annual  product  of  their  labor.  They  save  twenty 
thousand  dollars  per  year.  In  one  hundred  years  they  would, 
at  this  rate,  save  two  million  dollars.  In  two  thousand  eight 
hundred  and  seventy  years,  by  the  process  of  saving  and  loan- 
ing their  savings,  without  interest,  their  credits  would  equal  the 
total  property  of  the  island,  less  the  amount  of  property  which 
they  originally  owned,  and  they  would,  in  effect,  own  the  island. 


152  THE  DISTRIBUTION   OP  WEALTH. 

However,  at  the  expiration  of  ten  years,  the  Smiths  have 
hoarded  up  two  hundred  thousand  dollars  of  the  money  of  the 
island.  The  money  remaining  in  the  hands  of  the  people  is  not 
sufficient  to  answer  the  requirements  of  trade.  There  is  a  de- 
mand for  more  money.  Smith  says  he  has  money  that  he  is  not 
using,  and  that  for  a  small  compensation,  eight  per  cent,  per 
annum,  he  would  be  willing  to  loan  it.  So  the  one  hundred 
Smiths  all  go  to  loaning  at  eight  per  cent.  Loaning  both  annual 
savings  and  interest  accumulations  each  year,  at  the  end  of 
twenty  years  they  have  accumulated  seven  hundred  and  twenty- 
one  thousand  four  hundred  and  eighty  dollars ;  and  at  the 
expiration  of  sixty-five  years  their  credits  would  reach  the  sum 
of  fifty-nine  million  dollars, — an  amount  in  excess  of  the  total 
value  of  the  island  and  the  accumulated  wealth  of  the  whole 
people. 

If,  instead  of  one  hundred  Smith  families,  there  be  two  hun- 
dred families, — that  is,  one  fiftieth  of  the  entire  population, — 
who  save  at  the  rate  of  two  hundred  dollars  per  year,  receiving 
interest  at  the  rate  of  eight  per  cent,  after  the  tenth  year,  they 
will  own  the  island  in  less  than  fifty  years. 

But,  after  the  enterprising  Smiths  have  accumulated  a  large 
capital,  they  become  ambitious  to  engage  in  business  enterprises, 
and  they  employ  their  credits  in  other  ways.  Having  control 
of  the  money  market,  they  may  inflate  or  depress  values  at  will. 
They  call  upon  the  Joneses,  the  Thompsons,  and  the  Johnsons  to 
pay  their  notes  by  a  certain  day.  Had  they  called  on  but  one 
or  two,  the  necessary  amount  of  money  could  be  readily  found ; 
but  when  two  or  three  hundred  debtors  are  called  upon  at  the 
same  time  to  discharge  a  large  aggregate  amount  of  credits, 
money  becomes  scarce, — there  is  a  tight  market.  The  debtors 
offer  to  sell  farms,  mills,  anything,  to  raise  money ;  but,  owing 
to  the  stringency  in  the  money  market,  no  one  has  money  to 
invest,  except  at  ruinously  low  prices.  Prices  go  down;  and 
then  the  Smiths  buy  real  estate.  When  the  pressure  has  been 
removed,  business  gradually  recovers  tone  and  values  rise  again. 
There  is  a  demand  for  real  estate.  The  Smiths  hold  on  to  the 
lands  they  have  acquired  until  the  pressure  of  a  demand  which 
has  grown  beyond  the  supply  pushes  prices  higher  than  they 
were  before  the  fall ;  and  then  the  Smiths  have  real  estate  to 


THE  DISTRIBUTION  OF  WEALTH.  163 

sell, — on  time,  deferred  payments  drawing  usual  interest  and 
secured  by  mortgage. 

Add  to  the  situation  the  uncertainty  of  varying  seasons  and 
fluctuating  markets ;  introduce  the  cheap  labor  of  the  unfortu- 
nate or  improvident  poor,  dependent  upon  the  capital  of  others 
for  their  employment,  and  we  have  an  illustration  of  the  power 
of  accumulated  capital  and  the  subjection  of  those  who  are 
without  it  to  those  who  have  it. 

In  the  foregoing  illustration  it  will  be  observed  that  the 
Smiths  do  not  really  save  any  of  the  products  of  their  own 
labor.  The  wheat,  the  corn,  and  the  cloth  which  they  produce 
are  not  saved,  but  are  consumed  by  others  fully  able  and  willing 
to  produce  all  they  desire  to  consume.  But,  since  all  products 
are  thrown  into  a  common  market,  they  cannot,  if  they  would, 
avoid  consuming  Smith's  wheat  and  corn  and  cloth ;  and  the 
only  means  they  have  to  keep  up  with  Smith  in  the  race,  and 
avoid  getting  in  his  debt,  is  to  limit  their  own  consumption  to 
Smith's  standard  of  living.  If  Smith  wears  wooden  shoes  and 
drinks  his  tea  without  sugar,  they  must  do  likewise.  They 
must  copy  their  bill  of  fare  from  that  of  the  economical  Smith, 
or  the  Smiths  will  own  the  country.  They  cannot  get  even  with 
Smith  by  raising  larger  crops,  for  the  supply  is  already  sufficient 
to  satisfy  the  demand. 

The  annual  product  of  labor  from  year  to  year  cannot  be 
saved ;  but  credits,  the  result  of  selling  one  thousand  dollars' 
worth  of  labor  in  the  market  and  buying  but  eight  hundred 
dollars'  worth,  may  be  preserved  from  year  to  year  indefinitely, 
and,  with  the  aid  of  interest,  will  grow  and  grow  till  the  wealth 
of  a  nation  is  absorbed.  Had  it  occurred  to  the  wily  but  then 
inexperienced  Satan  to  sell  Adam  a  twenty-five-cent  pocket- 
knife,  and  take  his  note  at  eight  per  cent,  compound  interest, 
secured  by  a  mortgage  on  the  world,  in  less  than  five  hundred 
years  the  debt  would  have  amounted  to  more  than  the  total 
present  wealth  of  all  the  nations  of  the  earth ;  and,  intrenched 
behind  the  principle  so  often  announced  with  long-eared 
solemnity,  that  vested  rights  must  ever  be  held  sacred,  the 
devil  would  now  own  the  world. 

I  have  endeavored  here  to  illustrate  the  nature  and  results  of 
an  industrial  contest  between  an  energetic,  economical  people 


154  THE  DISTRIBUTION   OF  WEALTH. 

accustomed  to  mean  living,  and  an  equally  industrious  people 
accustomed  to  more  generous  habits  of  life.  When  their  labor 
is  contributed  to  a  common  market,  and  their  consumption  is 
drawn  from  the  same  market,  the  more  generous  consumer  falls 
behind  his  meaner  competitor,  who  takes  advantage  of  the  mar- 
ket which  he  supplies,  but  which  he  does  little  to  create. 

It  is  true  that  it  would  not  be  possible  to  find  a  community  in 
which  there  are  two  well-defined  classes,  such  as  have  been 
described ;  but  the  principle  has  its  illustration  in  many  indi- 
vidual instances,  which  any  one  may  call  to  mind.  It  has  its 
illustration  in  the  competition  between  Chinese  and  American 
labor,  in  the  competition  between  convict  and  slave  labor  with 
free  labor,  and  the  cheap  labor  of  the  poor  with  the  labor  of  the 
more  thrifty;  the  parallel  effect  in  the  latter  cases  being 
obscured  by  the  fact  that  the  saving  resulting  from  the  small 
compensation  of  slave  or  dependent  labor,  instead  of  being  saved 
to  the  laborer,  is  saved  to  the  employer. 

The  operation  of  the  principle  is  also  further  obscured  by 
reason  of  the  fact  that  the  classes  who  are  the  most  generous 
consumers  are  generally  possessed  of  a  higher  degree  of  intelli- 
gence and  skill,  by  means  of  which  they  are  raised  to  a  higher 
industrial  level,  out  of  contact  with  the  immediate  competition 
of  the  classes  who  are  more  meagre  consumers. 

Suppose  that  on  the  island  which  has  been  described,  where 
the  wages  of  each  worker  are  rated  at  three  dollars  per  day,  and 
where  present  labor  is  equal  to  the  demands  of  consumption, 
there  are  introduced  three  hundred  carpenters,  who  are  willing 
to  work  at  the  rate  of  one  dollar  and  a  half  per  day,  that 
amount  being  sufiicient  to  supply  their  wants  according  to  their 
accustomed  mode  of  living.  Both  wages  and  consumption  of 
that  class  of  mechanics  on  the  island  must  fall  to  a  figure  ap- 
proximating the  lower  rate  of  wages.  A  like  competition  in 
any  other  trade  must  produce  like  results.  The  effect  in  the 
end  is  decreased  consumption  ;  an  over-supply  of  labor,  since 
there  will  always  be  those  who  desire  to  increase  the  amount  of 
their  consumption  above  the  enforced  average  ;  markets  will  be 
over-weighted,  and  yet  the  wants  of  the  people  be  unsupplied. 

To  this  will  come  the  ever-ready  response  that  the  prices  of 
the  products  of  labor  fall  in  the  same  ratio  as  the  price  of  labor 


THE  DISTRIBUTION  OP  WEALTH.  155 

falls,  and  that  the  purchasing  value  of  a  day's  wages  will 
continue  the  same. 

But,  unfortunately,  values  do  not  shrink  in  the  same  ratio  in 
all  departments  of  labor  at  the  same  time.  Cattle  have  been 
very  low  for  years,  yet  retail  prices  of  beef  have  fallen  but  little. 
The  fall  in  prices  of  wheat  are  not  responded  to  by  a  corre- 
sponding fall  in  the  prices  of  bread  at  the  baker's.  Low  prices  of 
agricultural  produce  are  not  soon  felt  in  the  reduction  of  the 
prices  of  cloth  and  nails.  A  reduction  in  wages  is  not  followed 
by  a  corresponding  reduction  in  rents.  Besides,  lower  wages 
are  often  the  effect  of  the  introduction  of  a  class  of  laborers 
whose  habits  of  living  have  been  gauged  by  and  adapted  to  a 
smaller  consumption  of  the  products  of  labor,  and  others  in  the 
same  line  of  employment  are  thereby  compelled  to  adopt  the 
same  standard  of  life.  The  Smiths,  too,  are  always  on  band  to 
save  money,  to  store  up  credits;  and  the  fluctuating  prices  and 
the  vicissitudes  of  workers  struggling  to  adjust  themselves  to 
changing  conditions  furnish  to  capital  its  opportunities.  The 
interest-bearing  credits  of  the  people  of  the  United  States  at 
this  time  are  probably  not  less  than  twelve  billion  dollars.  A 
debt  of  one  hundred  dollars  contracted  when  labor  is  worth 
three  dollars  per  day  does  not  become  a  debt  of  fifty  dollars 
when  labor  is  worth  but  one  dollar  and  fifty  cents  per  day,  but 
a  debt  of  66.6  days'  labor ;  whereas  before  it  was  a  debt  of  only 
33.3  days'  labor. 

Mr.  Edward  Atkinson  says,  "  If  our  population  January  1, 
1885,  shall  be  fifty-eight  million,  two  cents  per  day  profit  on 
each  person's  consumption  would  be  $423,400,000,  a  sum  of 
profits  which  would  set  every  wheel  of  industry  in  most  rapid 
motion.  Two  cents  a  day  loss  would  bankrupt  thousands  of 
merchants  and  stop  more  mills  and  works  than  are  even  now 
idle."  We  may  draw  from  this  an  inference  as  to  the  effect  of 
fluctuating  values  resulting  from  the  heated  competition  of 
seventeen  million  workers  contending  against  each  other  in  the 
same  market.  Interruptions  and  adjustments  go  on  in  one  con- 
tinuous round,  and  the  wheels  of  industry  are  all  the  while 
more  or  less  clogged. 

The  farmer  sells  five  hundred  dollars'  worth  of  grain  or  stock. 
Naturally  he  would  invest  this  money  in  clothing  for  his  family 


156  THE  DISTRIBUTION  OF  WEALTH. 

or  in  improvements  about  his  dwelling  or  on  his  farm.  But  if 
he  has  two  hundred  dollars  interest  to  pay  on  debts,  his  con- 
sumption must  be  reduced  in  that  amount.  The  mechanic  whose 
home  is  mortgaged  and  the  merchant  who  is  in  debt  are  each 
also  endeavoring  to  save.  The  creditor  who  gathers  in  all  this 
interest  and  principal  is  able  to  consume  but  a  small  part  of  it, 
and  the  result  is  more  sellers  than  buyers,  prices  go  down  till 
consumers  are  found,  credits  are  swelled  in  proportion,  and  the 
aggregation  of  wealth  goes  on. 

A  fall  in  prices  of  the  products  of  any  single  industry,  except 
where  such  fall  is  at  the  expense  of  an  unreasonable  margin  in 
the  profits  of  capital,  breaks  the  round  of  production  and  con- 
sumption, disturbs  the  equilibrium  of  the  industries,  and  crowds 
men  out  of  employment. 

While,  except  as  considered  in  relation  to  existing  indebted- 
ness, a  general  and  uniform  fall  of  prices  of  all  products  pro- 
duces no  more  harmful  results  than  such  as  flow  from  the  un- 
certainty which  always  attends  a  change  of  money  values,  the 
change  of  the  relative  values  of  the  products  of  the  several  in- 
dustries impedes  and  checks  the  current  of  exchange,  deranges 
established  industrial  relations,  compels  wasteful  readjustments 
at  the  expense  of  the  working-classes,  work  is  suspended  and 
men  thrown  out  of  employment,  but  interest  goes  on  and  rents 
go  on. 

The  laborer  may  not,  and  generally  does  not,  save  the  differ- 
ence between  the  amount  he  consumes  and  the  value  of  the 
product  of  his  labor,  as  determined  by  the  market ;  the  excess  is 
saved  and  goes  to  increase  the  accumulations  of  the  capitalist. 
The  saving  may  be  an  actual  saving  in  the  form  of  an  increase 
of  durable  wealth,  or  it  may  be  only  an  apparent  saving,  in  the 
form  of  credits,  which,  like  the  savings  of  the  Smiths,  add  noth- 
ing to  the  nation's  wealth,  but  effect  a  transfer  of  wealth  from 
one  class  of  persons  to  another. 

Since,  to  a  people  as  a  whole,  the  only  saving  that  is  possible 
consists  in  an  expenditure  of  labor  in  the  creation  of  the  more 
durable  forms  of  property,  such  as  machinery,  tools,  houses, 
furniture,  and  the  like,  saving  may  be  said  to  be  a  form  of  ex- 
penditure. Whenever,  therefore,  there  is  a  general  attempt  to 
save  by  checking  the  current  of  consumption  and  piling  up 


THE  DISTRIBUTION  OF  WEALTH.  167 

money  and  credits,  the  eflfort  defeats  the  purpose.  But  when 
money  or  credits  have  accumulated  in  amounts  sufficient  to  in- 
vest in  the  creation  of  durable  property,  if  so  invested  there  is 
effected  a  saving  of  wealth  in  the  only  true  sense  of  the  terra. 

Should  the  people  consume  less  expensive  food,  cheaper  cloth- 
ing, and  fewer  articles  of  perishable  nature,  there  would  be  a 
saving  of  the  labor  required  to  produce  these  things,  which 
labor,  so  saved,  might  be  applied  to  the  creation  of  durable 
forms  of  wealth.  And  here  we  meet  the  question.  Is  there  any 
deficiency  in  the  supply  of  labor  which  might  be  so  employed  ? 
Is  there  not  already  an  overabundance  of  unemployed  labor, 
which  could  be  used  in  any  channel  of  industry  open  ? 

Eeleasing  labor  from  employment  and  turning  it  idle  on  the 
market  only  creates  greater  disturbance  in  values.  The  saving 
of  labor  is  no  advantage  except  when  the  labor  saved  may  be 
otherwise  usefully  employed.  But  when  labor  is  so  abundant 
that  the  pressing  question  is.  How  shall  it  be  employed  ?  there 
is  nothing  to  be  gained  by  adopting  a  rye-bread-and-potato  diet. 

It  is  true  that,  if  a  portion  of  what  is  consumed  by  some  in 
extravagance  and  waste  could  be  transferred,  by  some  process, 
to  those  who  are  in  need,  a  great  benefit  might  accrue  to  the 
poor  without  loss  to  any.  The  effect,  however, — at  least  the 
immediate  effect, — would  be  of  little  value  in  the  adjustment  of 
economic  forces. 

To  the  individual,  labor  saved  is  so  much  gained.  If  one 
person,  by  means  of  a  labor-saving  device,  or  by  superior  skill, 
be  able  to  perform  the  work  of  two  men,  he  receives  the  full 
benefit  of  his  increased  labor.  He  enjoys  an  advantage  measured 
by  the  inequality  between  himself  and  his  fellows.  But  were 
the  capacity  of  the  entire  body  of  American  laborers  to  be  sud- 
denly doubled,  I  much  doubt  whether  any  considerable  benefit 
or  increase  of  wealth  would  result  in  consequence  of  such  aug- 
mented power.  "With  a  proper  adjustment  of  economic  forces, 
and  with  fixed  industrial  conditions,  such  increase  of  power 
might  bring  great  opportunities  for  leisure  and  culture,  or  for 
aimless  idleness.  Whether  the  result  would  be  a  market  at 
frequent  intervals  choked  with  an  overabundance  of  the  products 
of  labor  of  the  kinds  now  in  demand,  or  whether  an  improved 
taste  might  demand  other  articles  of  luxury  sufficient  to  absorb 


158  THE  DISTRIBUTION   OF  WEALTH. 

the  increased  productive  power  of  labor,  it  might  be  unprofitable 
to  inquire  and  useless  to  predict ;  but,  doubtless,  the  poor  would 
remain,  and  present  extremes  of  poverty  and  wealth  would 
continue,  until  a  remedy  should  be  found  in  some  modification 
or  readjustment  of  economic  forces. 

Eecognizing  the  necessary  limitations  on  the  creation  of 
wealth,  how  is  the  family  of  the  workingman  to  be  supported 
during  sickness  or  old  age,  or  when  by  death  they  are  deprived 
of  the  support  of  his  daily  earnings?  By  what  means  shall 
those  opportunities  for  leisure  and  refined  culture,  so  essential 
to  the  progress  of  society  towards  the  higher  aims  of  civilization, 
be  supplied  to  those  whose  tastes  and  aspirations  fit  them  to 
lead  in  that  direction  ? 

The  people  of  a  nation,  interchanging  the  products  of  labor 
through  a  common  market,  constitute  a  single  industrial  entity ; 
they  form  a  social  compact,  with  mutual  interests  and  obliga- 
tions that  extend  through  the  entire  body ;  and  the  advantages 
which  accrue  are  common  property,  in  which  each  has  a  right 
to  share  according  to  the  part  which  he  performs,  not  only  in 
supplying,  but  also  in  making  the  common  market. 

The  whole  people  are  supported  by  the  labor  of  a  part.  The 
old  and  the  infirm,  and  all  the  dependent  members  of  society, 
are  necessarily  supported  by  the  labor  of  others.  This  right  to 
support,  founded  in  natural  law,  in  the  social  compact  takes  the 
form  of  definite  obligation.  Let  us  consider  in  what  manner 
this  obligation  arises  and  in  what  manner  it  is  discharged. 
During  the  period  of  the  worker's  most  active  industrial  life, 
the  product  of  his  labor  exceeds  the  amount  required  for  the 
consumption  of  himself  and  family.  This  excess  is  consumed 
by  others,  and  in  consideration  of  this  consumption  by  others 
he  acquires  money,  or  credits,  or  revenue-bearing  property,  such 
as  railway  stocks,  mills  or  houses  to  rent,  or  property  of  like 
character.  These  constitute  the  security  for  his  claim  against 
society  for  payment,  at  some  time  in  the  future,  in  other  labor 
products  equivalent  or  more  than  equivalent  to  the  product  of 
his  labor  that  has  been  consumed  by  others.  His  share  of  con- 
sumption is  deferred  to  old  age  or  to  the  time  when  needed  for 
the  support  of  those  naturally  dependent  upon  his  labor, — a 
wife,  children,  or  parents,  or  others  having  claims  founded  in 


THE  DISTRIBUTION  OP   WEALTH.  169 

sympathy  or  natural  obligation.  He  accumulates  wealth  for 
future  consumption.  The  course  of  distribution  is  extended  so 
as  to  embrace  the  life  of  a  generation  or  more.  This  is  a  very 
necessary  saving  for  future  use,  a  part  of  the  social  scheme,  a 
damming  of  the  water  till  it  gathers  sufficient  volume  to 
turn  the  wheel  that  moves  the  machinery  of  industry.  This 
gathered  wealth  is  consumed  or  distributed;  and  others,  in 
their  turn,  enjoy  like  opportunity  and  advantage.  In  this 
manner  the  young  and  vigorous  labor  of  the  country  is  made 
subject  to  the  burden  of  providing  the  support  of  the  dependent 
classes,  and  secures  to  itself  adequate  compensation  in  the  guar- 
antee of  an  equivalent  reward  in  the  future.  Every  individual, 
in  turn,  enjoys  the  same  opportunities  and  the  same  advantages. 
Civilization  is  the  perfection  of  the  social  compact. 

The  limitations  on  the  creation  and  use  of  property  are  such 
that  the  actual  accumulations  would  be  insufficient  to  provide 
for  the  wants  of  the  dependent  classes,  and  for  the  necessary 
requirements  of  society  so  organized,  without  the  aid  of  credits. 
It  is  through  credits,  stocks,  bonds,  and  mortgages,  and  their 
hold  upon  the  property  of  the  nation,  that  the  dependent  or  non- 
producing  classes  must  in  a  great  measure,  derive  their  support. 

If  the  labor  of  one  man  be  equal  to  the  production  of  twice 
the  amount  required  for  the  present  support  of  himself  and 
those  dependent  upon  him,  then  one-half  a  lifetime  spent  in 
active  labor  would  be  sufficient  to  provide  for  the  other  half. 
One  generation  during  its  period  of  active  labor  would  support 
two,  and  the  next  generation  would,  in  its  turn,  do  the  same. 
This  is  possible,  not  by  means  alone  of  a  storage  for  future  con- 
sumption, but  in  the  manner  here  pointed  out.  And,  while 
debts  are  not  to  be  invited,  credits  constitute  a  useful  and  very 
necessary  factor  in  our  industrial  economy. 

When  a  man  has  worked  half  a  lifetime,  and  supported  two 
families,  or,  what  is  the  same,  has  contributed  to  the  production 
of  the  country  the  equivalent  of  the  support  of  two  families, 
society  is  in  his  debt  in  the  amount  which  the  product  of  his 
labor  has  exceeded  his  consumption.  The  notes  he  holds  for 
money  loaned,  his  railway  bonds  or  bank  stock,  or  other  property 
representing  his  vested  capital,  constitute  his  security  for  the 
payment  of  that  debt.     Through  the  consumption  of  himself 


160  THE  DISTRIBUTION  OF  WEALTH. 

and  family  that  debt  is  discharged,  and  the  property  acquired 
or  the  title  represented  by  the  credits  he  holds  passes  to  the 
next  generation,  and  the  process  of  accumulation  and  expendi- 
ture is  repeated,  and  so  long  as  society  endures  must  continue. 

The  aggregation  of  capital  or  wealth  to  the  extent  here  indi- 
cated is  not  only  beneficial,  but  necessary.  But  it  bears  no 
relation  whatever  to  that  unhealthy  aggregation  that  unduly 
absorbs  the  credits  of  a  country,  and  deprives  the  many  of  this 
opportunity  to  provide  for  sickness  and  age,  and  for  widows  and 
dependent  children.  Large  aggregations  of  capital  prevent 
these  smaller  accumulations,  so  essential  to  an  equitable  distri- 
bution of  the  common  benefits  and  opportunities  which  it  is  the 
purpose  of  the  social  compact  to  create  and  to  preserve,  by 
absorbing  the  fund  out  of  which  these  small  stores  of  wealth 
must  be  gathered. 

The  money  which  is  paid  to  the  worker  in  the  form  of  wages, 
or  as  the  price  of  the  product  of  his  labor,  is  merely  a  certificate 
that  he  has  contributed  so  much  to  the  support  of  society,  and 
is,  in  return,  entitled  to  the  product  of  an  equivalent  amount  of 
labor,  valued  according  to  the  accepted  standard,  in  whatever 
form  he  may  elect.  Money  serves  the  purpose  of  a  medium  of 
exchange, — it  is  a  certificate  of  credit.  Labor  in  the  end  is  paid 
for  with  the  product  of  other  labor,  or  with  land  or  some  of  its 
products,  which,  having  been  appropriated  to  exclusive  owner- 
ship,  possess  value  by  reason  of  their  utility,  and  of  the  fact  that 
land  is  limited  in  quantity. 

A  exchanges  his  labor  for  the  labor  of  B  and  C,  or  for  a 
part  of  the  labor  of  a  hundred  other  persons.  This  he  is  enabled 
to  do  by  reason  of  the  intervention  of  money  as  a  medium  of 
exchange.  If  A  has  received  for  his  labor  one  hundred  dollars 
in  gold,  that  one  hundred  dollars  represents  the  promise  of 
society,  which  has  consumed  the  product  of  his  labor,  that  he 
shall  be  repaid  in  the  products  of  other  labor  of  any  form  he 
may  select  in  an  amount  representing  an  equivalent  value. 
Society  stands  ready  at  all  times  to  cash  its  checks  with  the 
present  products  of  labor.  A  can  have  flour,  meat,  clothing, 
lumber,  or  the  product  of  the  labor  of  the  mechanic,  or  what- 
ever else  he  may  desire.  But  A  is  not  ready  to  receive  pay- 
ment.   He  not  only  holds  the  obligation  of  society  which  he 


THE  DISTRIBUTION  OP  WEALTH.  161 

has  received,  good  for  all  time,  but  he  continues  to  contribute 
his  own  labor  to  the  common  market,  which  be  enjoys  but  does 
not  help  to  make,  and  receives  more  dollars.  Now,  by  the  de- 
vice of  a  loan,  a  note  and  a  mortgage,  he  converts  this  money, 
which  bears  no  interest,  into  an  interest-bearing  obligation, 
which,  by  means  of  interest  accumulations,  grows  and  increases ; 
and,  instead  of  the  people  who  consumed  the  product  of  A's 
labor  paying  the  obligation  given  him,  by  returning  a  product 
of  equivalent  value,  A's  grandchildren  will  hold  railway  bonds 
to  the  amount  of  five  thousand  dollars,  representing  what  was 
in  the  beginning  but  two  hundred  dollars  and  accrued  interest ; 
and  the  people,  who  had  no  part  in  contracting  the  debt,  will 
pay  three  hundred  dollars  every  year,  without  in  the  least  re- 
ducing the  principal  of  the  debt.  It  is  thus  that  the  people  of 
one  generation  become  burdened  by  the  obligations  of  a  past 
generation,  and  are  laid  under  tribute  to  aggregated  wealth, 
from  which  there  appears  no  avenue  of  escape.  This  trans- 
action of  A's  is  commonly  called  saving,  but,  in  fact,  A  did  not 
save  anything. 

The  current  of  exchange,  by  which  obligations  are  cancelled 
as  they  are  made,  may  be  thus  interrupted  by  the  economy  or 
parsimony  of  a  penurious  young  man,  who,  like  a  lodged  scow 
in  the  river  of  trade,  year  by  year  gathers  the  drifting  sand, 
develops  into  a  sand-bar  as  an  usurer,  and  finally  into  an  island  as 
a  millionaire.  The  river  shifts  its  channel  to  give  the  island 
room,  and  the  surging  current  eats  into  the  land  along  the  shore 
and  deposits  its  burden  on  the  island's  growing  banks. 


THE  USE   OP   LIQUORS  AND  TOBACCO. 

The  value  of  the  manufactured  product  of  tobacco  returned 
in  the  census  of  1880  was  $119,480,166.  The  exports  exceeded 
the  imports  to  the  amount  of  about  twenty  million  dollars ;  so 
that  the  net  product  consumed  in  the  United  States  was  about 
ninety-nine  million  dollars.  The  internal  revenue  taxes  on  to- 
bacco amounted  to  $38,870,140,  which  increased  the  total  value 
to  $137,870,140.  Sixty-four  per  cent,  of  this  was  cigars  and 
cigarettes.  The  total  value,  as  sold  at  retail,  was  probably  three 
hundred  million  dollars. 

11 


162  THE  DISTRIBUTION  OF  WEALTH. 

The  consumption  of  liquors  in  1880  was  as  follows  : 

Gallons. 

Spirits  consumed 63,526,694 

Wines         "        24,162,925 

Beer  and  ale  consumed 444,112,169 

The  revenue  taxes  paid  on  spirits  and  fermented  liquors 
amounted  to  seventy-four  million  dollars. 

These  liquors  brought  at  retail,  I  think,  not  less  than  five 
hundred  million  dollars.  Competent  authorities  estimate  the 
amount  still  greater.  The  aggregate  expenditures  in  the  year 
1880  for  liquors  and  tobacco  were  probably  eight  hundred  million 
dollars.  Of  this,  maybe  one  hundred  million  dollars  was  neces- 
sary consumption ;  but  seven  hundred  million  dollars  of  this  ex- 
penditure was  not  necessary,  in  the  rigorous  sense  of  that  term. 
Had  the  people  refrained  from  the  use  of  these  articles  to  the 
extent  of  seven  hundred  million  dollars,  what  would  have  been 
saved?  The  total  taxes,  internal  revenue,  State,  and  license, 
probably  amounted  to  one  hundred  and  fifty  million  dollars. 
This  sum  would  not  have  been  saved,  since  the  people  pay  the 
taxes  to  themselves.  Of  the  remainder,  thirty-seven  million 
dollars  went  to  the  tobacco  raiser ;  twenty-five  million  dollars 
were  paid  out  in  wages  to  the  employes  of  manufacturers ;  eighty- 
six  million  dollars  were  paid  for  materials  used  in  manufacture 
of  liquors,  part  of  which  went  to  railway  companies  and  middle- 
men ;  fifteen  million  dollars  paid  the  wages  of  persons  engaged 
in  the  manufacture  of  liquors ;  and  the  remainder,  three  hun- 
dred and  eighty-seven  million  dollars,  went  to  manufacturex'S, 
transportation  companies,  wholesalers,  and  retailers,  of  whom 
there  were  sixty-eight  thousand  four  hundred  and  sixty-one 
saloon-keepers  and  bar-tenders ; "  and  a  large  part  went  to  pay 
the  rents  on  buildings  used.  The  saving  which  would  have 
resulted  from  such  reduction  in  the  consumption  would  be  so 
much  labor  as  was  required  in  production,  transportation,  and 
sale  of  the  product  consumed.  Another  effect  would  be  to  de- 
prive capital  of  inordinate  profits  derived  through  this  branch 
of  industry.  After  paying  for  materials  used  and  paying  wages, 
capital  employed  in  manufacture  retained  about  sixty-three  mil- 
lion dollars.  In  this  amount  the  profits  of  capital  employed  in 
the  transportation  and  sale  are  not  included.    The  net  contri- 


THE  DISTRIBUTION  OP  WEALTH.  163 

bution  to  capital  through  the  consumption  of  tobacco  and  liquors 
probably  reached  two  hundred  or  two  hundred  and  fifty  million 
dollars. 

But  there  is  another  consideration  of  far  greater  economic 
importance.  The  expenditures  of  the  working-people  for  to- 
bacco and  cigars  are  not  distributed  according  to  incomes.  A 
spends  nothing ;  B  spends  ten  dollars  per  year ;  C,  twenty-five 
dollars;  D,  fifty  dollars;  E,  one  hundred  dollars;  while  P 
spends  two  hundred  dollars  per  year.  Because  of  acquired 
tastes  and  fixed  habits,  these  expenditures  become  in  a  great 
measure  unavoidable ;  and  the  result  is  that  the  savings  of  one 
class  of  men  are  all  the  while  transferred  to  another  class,  and 
are  finally  absorbed  in  the  fortunes  of  the  wealthy.  The  profits 
are  enjoyed  not  by  those  alone  who  are  engaged  in  the  manu- 
facture and  traffic  of  these  articles,  but  by  every  other  capitalist, 
whose  capital  is  in  a  measure  relieved  from  competition  by  the 
diversion  of  a  part  of  the  capital  of  the  nation  from  employment 
in  other  industries. 

From  a  strictly  economic  point  of  view,  the  chief  objection  to 
be  urged  against  the  consumption  of  tobacco  and  liquors  is  that 
it  takes  away  the  margin  of  savings  from  the  workers  who 
habitually  use  these  articles,  and  is  a  most  effective  agency  in 
the  aggregation  of  wealth.  Strange  as  it  may  appear,  it  is 
nevertheless  true  that,  if  the  habit  of  using  tobacco  and  liquors 
was  universal,  and  the  expenditure  of  each  individual  was,  as 
compared  with  his  income,  relatively  the  same  as  that  of  every 
other  individual,  the  margin  of  savings  would  not  be  affected, 
except  to  the  extent  that  labor  is  diverted  from  other  industries 
where  it  is  needed ;  and  so  long  as  we  have  so  much  idle  labor, 
it  may  well  be  questioned  whether  the  employment  of  a  very 
considerable  number  of  workers  in  a  wholly  useless  industry 
diminishes  either  the  annual  product  of  durable  property,  which 
represents  the  savings  of  the  people,  or  the  products  of  those 
industries  which  supply  the  necessaries  and  comforts  of  life. 

The  fact  that  a  degree  of  opprobrium  attaches  to  the  sale  of 
intoxicating  liquors  greatly  increases  the  profits  of  capital  in- 
vested in  that  business.  The  man  who  rents  a  building  for  a 
saloon  demands  more  rent,  and  the  saloon-keeper  secures  larger 
profits  by  engaging  in  a  business  that  antagonizes  public  senti- 


164  THE  DISTRIBUTION  OF  WEALTH. 

ment.  This  unfriendly  sentiment,  aided  by  the  levy  of  high 
taxes,  has  made  the  manufacture  and  sale  of  liquors  in  some 
degree  a  monopoly.  Capital  derives  pecuniary  benefit  and  labor 
enjoys  the  moral  results. 

In  our  great  cities,  vice  in  all  its  forms  levies  heavy  tribute 
upon  the  earnings  of  industry ;  but  at  the  end  of  the  year,  when 
capital  balances  its  accounts,  there  is  always  to  be  found  to  the 
credit  of  rent  a  liberal  portion  of  the  tribute  gathered. 

Individual  economy  in  expenditure  is  always  and  everywhere 
to  be  encouraged.  That  condition  of  society  is  best  in  which 
the  consumption  of  each  person  bears  the  same  relation  to  his 
earnings  as  the  expenditures  of  every  other  person  bear  to  his 
earnings,  where  each  worker  who  enjoys  the  benefit  of  the 
common  market  for  labor  contributes  his  due  proportion  towards 
sustaining  that  market,  by  means  of  a  relatively  equivalent  con- 
sumption. On  no  other  basis  can  this  condition  be  so  nearly 
reached  as  on  the  level  of  an  intelligent,  economic,  and  judicious 
expenditure  by  each  member  of  society.  Parsimony  is  not  only 
a  private  vice,  but  a  public  injury. 

LIMITATIONS   ON    CREDIT. 

Were  the  savings,  or  the  accumulations  of  wealth,  of  each  in- 
dividual represented  only  by  the  tangible  property  owned  by 
him,  the  power  to  accumulate  would  be  confined  within  com- 
paratively narrow  limits.  By  the  intervention  of  credits,  these 
limits  are  greatly  extended.  By  means  of  the  employment  of 
credits  the  control  and  ownership  of  property  may  remain  with 
A,  B,  and  C,  who  may  be  indebted  to  E  in  an  amount  equal 
to  half  or  two-thirds  the  value  of  the  property  they  own.  In 
this  case  E  may  be  said,  in  effect,  to  own  one-half  of  the  prop- 
erty, the  title  to  which  is  in  A,  B,  and  C.  A  very  great  pro- 
portion of  the  accumulated  wealth  of  the  people  of  the  United 
States  is  in  the  form  of  credits,  which  represent  actual  wealth 
owned  and  controlled  by  others. 

Credits  are  a  most  desirable  form  of  investment.  They  bear 
a  fixed  revenue,  fluctuating  only  within  the  narrow  range  which 
measures  the  fluctuations  in  the  value  of  the  precious  metals ; 
when  other  property  depreciates,  the  value  of  credits  increases  j 


THE  DISTRIBUTION   OP  WEALTH.  166 

they  are  readily  convertible  into  other  forms  of  wealth,  and,  in 
the  form  of  notes  and  bonds,  may  be  borne  from  place  to  place 
like  money. 

Within  the  term  credits  I  embrace  stocks  of  railway  com- 
panies, gas  companies,  and  the  like,  which,  in  the  true  sense  of 
the  word,  are  not  credits,  yet  since  they  possess  many  of  the 
characteristics  of  credits,  for  the  purposes  of  the  present  discus- 
sion they  may  be  so  classed.  The  limits  of  private  indebtedness 
are  determined  by  the  amount  of  tangible  property  in  the  hands 
of  the  people,  and  by  the  conditions  of  trade  and  finance,  and 
by  the  rate  of  interest.  When  private  indebtedness  has  become 
so  great  as  to  make  it  difficult  for  debtors  to  meet  accruing 
obligations,  and  leads  to  the  enforced  sale  of  property,  values  be- 
come impaired,  the  course  of  trade  is  interrupted,  the  issues  of 
business  enterprises  are  made  subject  to  the  uncertainty  of 
fluctuating  values,  and  industry,  in  all  its  forms,  becomes  de- 
pressed ;  under  the  pressure  of  enforced  collections  property 
changes  hands  at  low  values,  and  disastrous  panics  are  liable  to 
occur.  Property  changes  owners,  debts  are  cancelled,  the 
volume  of  credits  is  reduced,  and  trade  resumes  its  accustomed 
channels.  The  net  result  is  always  a  greater  aggregation  of 
wealth.  While  there  is  no  destruction  of  property,  there  is  a 
temporary  depression  of  values,  and  a  derangement  in  the  rela- 
tion of  values,  by  which  many  fortunes  are  swept  away,  but 
gathered  again  in  larger  drifts  farther  down  the  stream. 

Except  for  the  accumulation  of  credits  to  an  amount  beyond 
the  limit  which  may  be  borne  under  any  fairly-regulated  system 
of  industry  and  trade,  panics  could  never  occur.  But  when  the 
volume  of  credits  has  grown  so  large  that  accruing  obligations 
can  no  longer  be  met  in  the  ordinary  course  of  trade,  the  way 
becomes  blocked  and  panics  ensue. 

The  growing  tendency  of  credits  is  described  by  Dr.  Way  land 
as  follows :  "  When  men  purchase  on  credit,  they  draw  upon  a 
fund  which  has  no  definable  limits.  High  hopes  impel  men  to 
extend  their  purchasing  power  to  the  utmost  by  adding  to  their 
ready  money  all  the  credit  they  can  command.  This  is  the 
point  of  danger. 

"This  element  in  the  market  disturbs  the  equilibrium  of 
prices  without  respect  to  the  true  standard  j  an  artificial  de- 


166  THE  DISTRIBUTION  OP  WEALTH. 

mand  is  created  which  finds  no  check,  because  advancing  prices, 
and  profits  apparently  increased,  seem  to  warrant  the  further 
expansion  of  credit. 

"Hence  comes  that  excess  of  speculative  purchases  which 
Mr.  Mill  calls  the  prime  cause  of  commercial  crises,  and  which 
leads  to  the  sudden  recoil  of  prices  and  consequent  collapse. 

"  The  panic  which  follows  is  as  rash  and  unreasoning  as  was 
the  confidence  which  blew  the  bubble,  and  precludes  the  appli- 
cation of  any  effective  relief. 

"  The  necessity  of  turning  all  kinds  of  property  into  money 
to  meet  indebtedness  fills  the  market  with  sellers,  while  few  are 
ready  to  buy,  and  prices  sink  as  far  below  the  standard  as  they 
were  previously  raised  above  it. 

"  Then  production  must  be  suspended  and  business  stand  still 
till  adjustments  are  made  and  the  basis  is  laid  for  starting  again 
by  the  true  standard,  with  mutual  confidence  qualified  and 
restored." 

The  amount  of  indebtedness  which  may  be  safely  incurred  by 
a  state,  or  country,  or  other  municipality,  depends  of  course 
upon  the  limits  of  the  public  revenue.  The  amount  of  revenue, 
however,  which  may  be  raised  by  taxation  from  year  to  year 
depends  to  a  great  extent  on  how  that  revenue  is  expended. 
Where  the  amount  collected  in  taxes  is  promptly  paid  out,  and 
is  at  once  distributed  through  the  ordinary  channels  of  trade, 
the  money  paid  in  taxes  serves  only  as  a  medium  of  exchange  ; 
and  the  farmer  really  pays  his  taxes  in  wheat  and  cattle,  the 
carpenter  in  the  work  of  his  trade,  and  the  manufacturer  in  the 
product  of  manufacture.  Where,  however,  taxes  collected  are 
paid  out  in  the  form  of  interest  on  a  public  debt,  to  a  creditor- 
class  who  have  no  occasion  to  expend  the  money  so  received  for 
the  products  of  labor,  but  who  retain  it  and,  as  opportunity 
offers,  reloan  it,  perhaps  in  some  distant  locality,  the  round  of 
exchange  is  broken,  the  money  paid  in  taxes  does  not  soon  re- 
turn in  response  to  a  demand  for  the  products  of  the  farm  or 
the  shop,  and  the  tendency  is  therefore  to  suspend  industry  and 
depreciate  values.  As  the  public  debt  is  cancelled,  private  in- 
debtedness takes  its  place. 

Take  for  illustration  the  revenues  annually  collected  and 
expended  in  payment  of  teachers  in  our  schools.    The  money 


THE  DISTRIBUTION  OP  WEALTH.  167 

quickly  returns  through  the  channels  of  trade,  without  the 
intervention  of  loans.  There  is  but  an  exchange  of  the  prod- 
ucts of  labor,  or  an  exchange  of  work ;  the  round  of  production 
and  consumption  is  complete.  But  suppose  the  amount  of 
money  which  a  State  pays  to  its  thousands  of  teachers  be  paid 
to  one  individual,  what  is  the  effect  ?  When  and  how  does  that 
money  return  to  the  people  ?  The  tax  is  paid  in  money  which 
cannot  long  be  spared  ;  when  will  the  necessary  round  of  ex- 
change be  made  complete  by  a  substitution  of  the  products  of 
labor  which  can  be  spared  for  the  money  which  cannot  be  ? 

The  amount  of  revenue  which  can  be  raised  by  taxation,  it 
will  be  readily  seen,  therefore,  depends  in  great  degree  upon  how 
it  is  expended.  We  have  here  another  example  of  the  evil 
effects  of  the  aggregation  of  wealth. 

The  amount  of  credits  floated  in  the  United  States  cannot 
be  very  closely  ascertained  from  statistics  which  have  been 
gathered.  The  following  is  taken  from  the  census  of  1880, 
except  where  noted  as  estimated : 

Stock  and  debt  of  railways $5,425,722,560 

"      "        "       telegraph  companies   ....  76,068,747 

"      "        "       telephone          "           ....  13,728,119 

Loans  of  national  banks 878,500,000 

Private  banks  and  savings  banks  (estimated)   .  1,000,000,000 

Public  debt  of  United  States 2,120,415,370 

State  and  municipal  bonded  debt 1,117,585,546 

Mortgage  indebtedness  of  the  people  (estimated)  2,000,000,000 

Other  interest-bearing  private  debts 500,000,000 

Total 113,132,015,342 

From  this  total  should  be  deducted  a  considerable  sum  on 
account  of  railway  stocks  included,  which  yield  no  dividend. 
And  there  should  be  added  stocks  and  bonds  of  street  railway 
companies,  gas-  and  water-works,  and  other  joint-stock  com- 
panies. Current  credits  between  manufacturers,  wholesalers,  and 
retail  merchants  are  not  considered.  Since  1880  the  volume  of 
debt  has  been  greatly  increased,  and  of  these  credits  not  less 
than  eighty  per  cent,  are  owned  by  persons  of  large  wealth. 

In  1870  the  total  mortgage  indebtedness  of  the  people  of 
Illinois  was  $319,864,278.     In  1880  the  amount  of  the  mortgage 


168  THE  DISTRIBUTION  OF  WEAL.TH. 

indebtedness  was  $204,461,364,  and  in  1887,  $416,379,068,  an 
increase  of  over  one  hundred  per  cent,  in  seven  years.  In  1870 
the  farm  mortgage  indebtedness  was  $95,721,003,  in  1880, 
$103,525,237,  and  in  1887,  $123,733,098.  In  the  November 
number  (1889)  of  the  Popular  Science  Monthly^  Joel  Benton 
asserts  that  the  farm  mortgages  of  the  Western  States  amount 
to  $3,422,000,000,  but  gives  no  authority  for  this  estimate. 

Professor  Gleed,  in  the  March  number  (1890)  of  the  Forum, 
states  that  since  1870  one  Western  mortgage  broker  in  Kansas 
has  made  nearly  ten  million  dollars  in  the  business  of  handling 
Western  loans,  and  that  there  are  probably  two  hundred  corpo- 
rations now  engaged  in  the  business  of  mortgage  brokerage  in 
Kansas  and  Nebraska  alone. 

The  increase  in  railway  mileage  in  the  United  States  between 
1879  and  1889  has  been  over  eighty  per  cent.,  and  there  has 
been  a  corresponding  increase  in  bank  loans.  Taking  these 
facts  as  an  index  of  the  increase  in  the  amount  of  stocks  and 
credits  in  the  United  States,  we  may  safely  assume  that  the 
amount  at  the  present  time  approximates  close  to  twenty 
billion  dollars,  or  about  one-third  of  the  present  estimated 
wealth  of  the  nation. 

But  of  railway  stocks  there  are  about  two  billion  four  hun- 
dred million  dollars  that  pay  no  dividend,  and  nearly  five 
billion  dollars  that  pay  less  than  one  per  cent,  dividend.  Eail- 
way  indebtedness  and  stock  paying  a  dividend  of  three  per  cent, 
and  over,  at  the  present  time,  amounts  to  about  five  billion  six 
hundred  million  dollars. 


CHAPTEE  YI. 

INTEREST   ON    CREDITS. 

*'  The  tooth  of  usury  must  be  grinded,  that  it  bite  not  too  much." — Bacon. 

The  attitude  which  writers  on  economic  science  in  general 
occupy  towards  the  subject  of  interest  is  fairly  illustrated  in  the 
comments  of  Dr.  Wayland  on  usury  law.  Speaking  of  laws 
regulating  the  rate  of  interest,  he  says, — 


THE   DISTRIBUTION   OF   WEALTH.  169 

"They  violate  the  right  of  property.  A  man  has  the  same 
right  to  the  market-price  of  his  capital  in  money  as  he  has  to 
the  market-price  of  his  house,  his  ship,  or  any  other  of  his  pos- 
sessions. 

"  The  real  price  of  capital  cannot  be  forced  by  law,  any  more 
than  the  real  price  of  flour,  or  iron,  or  any  other  commodity. 

"  Suppose  that  to-day  money  is  worth,  in  the  ordinary  oper- 
ations of  business,  ten  per  cent.,  and  it  is  worth  six  per  cent,  in 
loan.  A  man  will  as  soon  loan  as  employ  it  in  business,  if  he 
possesses  more  than  he  wishes  to  use.  There  will  be  a  fair  sup- 
ply of  money  in  the  market.  But  let  the  profits  of  capital  rise, 
so  that  in  the  ordinary  operations  of  business  capital  is  worth 
twenty  per  cent.  If,  now,  the  rate  of  interest  rose  with  the 
increased  rate  of  profit,  the  same  individual  would  be  as  willing 
to  loan  as  before ;  and  thus,  the  supply  following  the  demand, 
there  would  arise  no  peculiar  scarcity. 

"  But  suppose  that  six  per  cent,  were  the  highest  legal  rate 
of  interest,  and  that  he  who  loaned  at  a  higher  rate  was  liable 
to  lose  both  his  principal  and  interest,  and  also  his  mercantile 
character ;  in  that  case,  as  soon  as  the  profits  of  capital  in  busi- 
ness arose  to  fifteen  or  twenty  per  cent.,  no  one,  who  could  thus 
employ  it,  would  loan  at  six  per  cent.  Hence,  the  supply  would 
be  immediately  diminished ;  and  this  would,  of  course,  cause  a 
greater  rise  of  interest. 

"  Such  laws  can  never  be  enforced.  Men  in  want  of  money 
will  pay  what  they  please  for  it,  and  they  who  choose  to  pay 
enough  can  generally  borrow. 

"Usury  laws  offer  a  premium  for  the  defiance  of  law,  and 
confer  a  monopoly  on  unscrupulous  extortions." 

John  Stuart  Mill  says, — 

"  Next  to  the  system  of  protection,  among  mischievous  inter- 
ferences with  the  spontaneous  course  of  industrial  transactions 
may  be  noticed  certain  interferences  with  contracts.  One  in- 
stance is  that  of  usury  laws.  These  originated  in  a  religious 
prejudice  against  receiving  interest  on  money  derived  from  that 
fruitful  source  of  mischief  in  modern  Europe,  the  attempted 
adaptation  to  Christianity  of  doctrines  and  precepts  drawn 
from  the  Jewish  law.  In  Mohammedan  nations  the  receiving 
of  interest  is  formally  interdicted  and  rigidly  abstained  from ; 


170  THE  DISTRIBUTION   OF  WEALTH. 

and  Sismondi  has  lioticed,  as  one  among  the  causes  of  industrial 
inferiority  of  the  Catholic  compared  with  the  Protestant  parts 
of  Europe,  that  the  Catholic  Church  in  the  Middle  Ages  gave 
its  sanction  to  the  same  prejudice,  which  subsists  impaired,  but 
not  destroyed,  wherever  that  religion  is  acknowledged.  Where 
law  or  conscientious  scruples  prevent  lending  at  interest,  the 
capital  which  belongs  to  persons  not  in  business  is  lost  to  pro- 
ductive purposes,  or  can  be  applied  to  them  only  in  peculiar 
circumstances  of  personal  connection  or  subterfuge.  Industry 
is  thus  limited  to  the  capital  of  the  undertakers,  and  to  what 
they  can  borrow  from  persons  not  bound  by  the  same  laws  or 
religion  as  themselves.  In  Mussulman  countries  the  bankers 
and  money  dealers  are  either  Hindoos,  Armenians,  or  Jews. 

"  In  more  improved  countries  legislation  no  longer  discounte- 
nances the  receipt  of  an  equivalent  for  money  lent ;  but  it  has 
everywhere  interfered  with  the  free  agency  of  the  lender  and 
the  borrower,  by  fixing  a  legal  limit  to  the  rate  of  interest,  and 
making  the  receipt  of  more  than  the  appointed  maximum  a 
penal  offence.  This  restriction,  though  approved  by  Adam 
Smith,  has  been  condemned  by  all  enlightened  persons  since  the 
triumphant  onslaught  made  upon  it  by  Bentham  in  his  '  Letters 
on  Usury,'  which  may  still  be  referred  to  as  the  best  extant 
writing  on  that  subject." 

Much  has  been  said  on  the  question  whether  or  not  interest 
has  any  foundation  in  equity,  or  whether  it  is  not  a  payment 
without  consideration.  There  is  a  theory,  presented  by  Mr. 
Henry  George  with  as  much  force  as  by  any  other  writer,  rest- 
ing upon  the  idea  that  the  control  which  a  person  may  acquire 
over  the  productive  forces  of  nature  confers  the  right  to  special 
advantages,  which  theory  is  urged  in  behalf  of  the  claim  that 
interest  is  an  equitable  charge.     Mr.  George  says, — 

"  Suppose  I  put  away  wine.  At  the  end  of  the  year  I  will 
have  an  increased  value,  for  the  wine  will  have  improved  in 
quality.  Or,  supposing  that  in  a  country  adapted  to  them  I  set 
out  bees ;  at  the  end  of  a  year  I  will  have  more  swarms  of  bees 
and  the  honey  which  they  have  made.  Or,  supposing  that 
where  there  is  a  range  I  turn  out  sheep,  or  hogs,  or  cattle ;  at 
the  end  of  a  year  I  will,  upon  the  average,  also  have  an  increase. 
Now,  what  gives  the  increase  in  this  case  is  something  which, 


THE  DISTRIBUTION  OF  WEALTH.  171 

though  it  generally  requires  labor  to  utilize  it,  is  yet  distinct 
and  separate  from  labor.  The  active  power  of  nature,  the  prin- 
ciple of  growth  which  everywhere  characterizes  all  forms  of 
that  mysterious  thing  or  condition  which  we  call  life.  And  it 
seoms  to  me  that  this  is  the  cause  of  interest,  or  the  increase  of 
capital,  over  and  above  that  due  to  labor." 

Mr.  George  holds,  therefore,  that  the  return  of  an  equal  num- 
ber of  bees  or  cattle  at  the  end  of  a  fixed  period  would  not  be 
suflScient  to  repay  the  loan  of  bees  or  cattle.  This  argument  is 
based  upon  the  theory  that  the  increased  value  of  the  wine,  or 
the  product  of  the  bees  or  cattle  during  the  period  of  loan,  ex- 
ceeds the  value  of  labor  required  to  secure  the  increased  prod- 
uct, and  the  amount  of  risk  of  loss  from  disease  or  other  cause 
incurred  by  keeping  the  wine,  or  bees,  or  cattle.  In  other  words, 
the  claim  is  made  that  if  A  has  control  of  certain  productive 
forces  of  nature,  he  is  entitled,  in  equity,  to  receive  from  society, 
for  his  labor,  an  amount  equal  to  that  which  B  receives  for  his 
labor,  and  something  in  addition  thereto ;  because  he  is  possessed 
of  certain  property  which  B  does  hot  have.  If  this  be  good 
doctrine,  it  appears  to  me  that  the  claim  of  Mr.  George,  that  no 
one  has  a  right  to  any  special  advantage  growing  out  of  the 
ownership  or  exclusive  possession  of  land,  cannot  be  well  founded. 
I  should  say  that,  when  a  man  receives  the  full  value  of  his  in- 
dustry and  skill,  society  is  no  longer  in  his  debt. 

The  increase  in  the  value  of  the  wine,  over  and  above  cost  of 
storage,  attention,  and  risk,  is  because  society  has  confeiTcd 
upon  capital  an  interest  value.  If  the  rate  be  six  per  cent.,  the 
value  of  the  wine  at  the  end  of  the  year  will  be  increased  six 
per  cent,  above  its  value  a  year  ago,  with  cost  of  storage  and 
risk  added ;  if  the  rate  be  twenty  per  cent.,  the  value  of  the 
wine  will  increase  in  the  same  ratio. 

If  A  has  an  article  of  property  to-day  for  which  he  has  no 
use,  since  all  property  is  subject  to  deterioration  in  value,  to 
decay,  or  to  destruction,  it  may  be  greatly  to  A's  advantage  to 
loan  that  property  to  B,  with  an  adequate  guarantee  that  its 
equivalent  will  be  returned  when  he  may  need  it.  If  A  is 
compelled  to  keep  on  hand  all  the  products  he  creates,  he  can- 
not accumulate.  A  man  cannot  provide  a  competence  for  the 
future  by  accumulating  hogs  And  cattle.    He  must  find  some 


172  THE  DISTRLBUTION  OF  WEALTH. 

one  who  will  take  them  and  return  him  an  equivalent  amount 
at  Bome  future  time.  The  advantage  is  more  to  him  who  lends 
than  to  him  who  borrows.  It  is  by  means  of  credits  that  a  man 
is  enabled  to  continue  to  produce  beyond  his  present  needs,  and 
avail  himself  of  the  use  of  his  surplus  product  at  any  time  in 
the  future  he  may  desire  to  do  so. 

In  order  to  perfect  the  method  by  which  this  may  be  done, 
and  enable  every  man  to  avail  himself  of  the  great  benefit 
which  results  from  "industrial  co-operation,  money  has  been  in- 
troduced, as  a  medium  of  exchange  and  a  medium  for  the  tem- 
porary storage  of  wealth,  during  the  intervals  which  must 
elapse  between  the  stages  of  a  completed  exchange.  For  the 
same  purpose,  and  with  the  further  object,  among  others,  of  pro- 
viding for  the  storage  of  wealth  during  long  periods,  credits  have 
been  introduced. 

The  nature  of  money  and  its  use  is  such  that  it  is  necessarily 
limited  in  amount.  And  when  any  member  of  the  social  com- 
pact appropriates  the  money  which  he  receives  in  exchange  to 
the  permanent  storage  of  wealth, — in  other  words,  when  he 
hoards  it, — he  does  society  a  wrong ;  but,  by  reason  of  his 
power  to  monopolize  the  medium  of  exchange,  other  members 
of  the  industrial  copartnership  may  be  compelled  to  pay  a 
premium  in  the  form  of  interest,  in  order  to  secure  a  return  of 
that  money  to  its  proper  uses.  The  chief  factor  in  determining 
the  rate  of  interest  is  the  monopoly  in  money. 

A  rate  of  interest  sufficient  to  cover  risk  of  loss,  and  perhaps 
the  trouble  that  the  lender  is  put  to  in  making  the  loan,  is 
founded  in  natural  equity,  and  is  merely  compensatory ;  but 
any  rate  beyond  this  must  find  its  justification  in  reasons  of 
public  policy. 

If  the  right  to  interest  be  founded  upon  the  theory  that  capi- 
tal is  a  productive  agent  or  power,  then  the  amount  of  remuner- 
ation to  which  capital  would  be  entitled  would  be  determined 
by  the  ratio  of  the  product  to  the  capital  employed.  But  where 
that  ratio  is  greatest,  interest  is  often  the  lowest.  Common 
observation  teaches  that  the  rate  of  interest  is  determined  by 
the  necessities  of  borrowers,  by  law,  by  custom,  and  by  the 
avarice  of  money-lenders,  as  well  as  by  the  supply  of  loans. 
The  rate  fluctuates  from  time  tO  time,  and  varies  in  different 


THE  DISTRIBUTION  OP  WEALTH.  173 

localities,  regardless  of  any  equitable  basis.  Money,  orn*  medium 
of  exchange,  is  made  a  subject  of  speculation,  like  wheat  or  com, 
and  usury  furnishes  the  inducement. 

Dr.  Wayland  says  that  "  a  man  has  the  same  right  to  the 
market-price  of  his  money  as  he  has  to  the  market-price  of  his 
house."  On  the  same  theory  a  man  would  have  the  right  lo 
stow  away  a  hundred  millions  of  dollars,  and  hold  it  till  the 
pressure  of  the  demand  was  sufficient  to  force  borrowers,  whose 
property  is  jeopardized  by  the  contraction  of  the  circulation,  to 
pay  such  rate  of  interest  as  he  might  choose  to  ask.  Money  is 
a  limited  quantity,  and  values  are  gauged  by  the  amount  in 
circulation.  No  man  has  the  right  to  withdraw  it  from  its 
legitimate  uses  and  convert  it  into  a  commodity.  He  may  have 
for  it  the  market-price,  but  society  has  the  right  to  determine 
the  limit  which  that  market-price  shall  not  exceed,  without  re- 
gard to  any  considerations  other  than  those  which  concern  the 
people  as  a  whole.  Both  Dr.  Wayland  and  Mr.  Mill  speak  as 
though,  without  a  satisfactory  rate  of  interest,  capital  might  IBq 
withdrawn  from  production.  Let  us  see.  Capital  consists, 
first,  of  money.  Of  this  the  total  amount  is  not  large.  Money, 
to  a  considerable  extent,  may  be  hoarded.  It  then  draws  no 
interest  and  commands  no  profit.  If  deposited  in  bank,  it  is 
loaned.  In  the  Middle  Ages  hoarding  gold  and  silver  was  not 
uncommon.  There  were  many  reasons  for  hoarding  then  that  no 
longer  exist.  But  it  will  hardly  be  seriously  contended  that  a  low 
rate  of  interest  at  the  present  time,  with  our  perfected  banking 
system,  would  lead  to  a  hoarding  of  money  to  any  serious 
extent. 

Second,  capital  consists  in  mills,  furnaces,  houses,  stocks  of 
goods,  etc.    How  these  can  be  withdrawn  is  not  apparent. 

Third,  capital  exists  in  the  form  of  credits.  The  amount  of 
credits  is  very  large.  It  must  remain  in  this  form,  or  else  it 
must  be  employed  in  production  by  its  owners.  It  becomes  at 
once  apparent  that  the  existing  order  cannot  be  changed.  If 
the  capitalist  who  runs  an  iron-mill  in  Pennsylvania  makes 
gains  to  the  amount  of  one  hundred  thousand  dollars,  for  in- 
stance, what  will  he  do  with  it  ?  He  must  put  it  into  more 
mills,  houses,  etc.,  or  in  credits.  If  it  exists  at  all,  it  must  exist 
in  some  form.     And,  if  capitalists  do  not  choose  to  avail  them- 


174  THE  DISTRIBUTION   OF  WEALTH. 

selves  of  "Credits  as  a  means  of  storage  for  their  wealth,  they 
must  cease  to  accumulate,  and  let  go  of  a  large  share  of  what 
they  now  have.  The  idea  that  capital  can  appear  and  disap- 
pear at  will,  like  the  intangible  substance  of  a  ghost,  does  not 
merit  serious  consideration.  That  a  low  rate  of  interest  will 
tend,  in  some  degree,  to  lead  persons  to  employ  their  own  capi- 
tal rather  than  loan  it,  is  true ;  and  this  is  one  of  the  reasons  to 
be  urged  in  favor  of  reducing  the  rate. 

Dr.  Way  land  speaks  of  capital  being  worth  twenty  per  cent, 
in  business.  At  times  it  is  worth  more.  But  is  it  to  be  seriously 
urged  that  the  capitalist  has  an  equitable  right  to  appropriate 
the  product  of  labor,  in  the  ratio  of  twenty  per  cent,  on  the 
capital  employed,  and  that  a  policy  of  legislation  which  would 
reduce  this  profit  nearer  to  an  equitable  standard  is  to  be  con- 
demned as  an  encroachment  on  his  rights  ? 

Finally,  we  are  told  that  usury  laws  can  never  be  enforced. 
There  is  no  warrant  for  this  statement.  These  laws,  when 
pfoperly  framed,  are  as  effective  as  other  laws.  It  is  true  that 
there  have  been  ineffective  usury  laws,  and  numerous  instances 
of  their  evasion  may  be  cited.  The  framing  of  these  laws  has 
not  always  been  inspired  by  an  earnest  purpose  to  make  them 
effective.  But  those  who  have  had  the  opportunity  to  observe 
the  operation  of  usury  laws  reasonably  well  framed  with  a  view 
to  enforcement,  know  that  legislation  on  this  subject  presents 
no  unusual  difficulties.  Writers  on  this  branch  of  the  subject 
of  political  economy  have,  I  presume,  copied  from  each  other  a 
statement  made  without  adequate  investigation.  The  policy  of 
statutory  limitations  on  the  rate  of  interest  has  been  almost 
universally  adopted  in  the  United  States,  and  the  views  gen- 
erally entertained  by  writers  on  political  economy  have  not  been 
accepted  as  the  basis  of  legislative  policy.  The  distinction 
between  the  right  to  limit  the  charge  for  the  use  of  money, 
and  the  right  to  limit  the  charge  for  the  use  of  a  house 
or  of  land,  is  based  on  the  peculiar  character  of  money  as 
distinguished  from  other  property. 

If  A  rent  a  house  of  the  value  of  two  thousand  dollars,  agree- 
ing to  pay  therefor  the  monthly  rental  of  twenty  dollars  per 
month,  he  acquires  the  use  of  two  thousand  dollars'  worth  of 
property.     If  he  borrows  two  thousand  dollars,  and  agrees  to 


THE  DISTRIBUTION   OF   WEALTH.  176 

pay  for  the  same  two  hundred  dollars  per  annum,  in  this  case 
also  he  acquires  the  use  of  two  thousand  dollars'  worth  of  prop- 
erty for  a  stipulated  consideration.  In  the  one  case  the  law 
does  not  interfere.  The  contract  for  rent  is  enforced  without 
regard  to  whether  the  charge  be  reasonable  or  extortionate. 
But  if  A  engage  to  pay  for  the  use  of  money  more  than  a  cer- 
tain prescribed  interest,  the  law  not  only  refuses  its  aid  in 
enforcing  the  agreement,  but  also  subjects  the  lender  to  the 
penalty  of  a  forfeiture  of  all  interest.  The  parties  in  either 
case  being  equally  free  to  contract,  why  does  the  law  interfere 
in  the  one  case  and  not  in  the  other  ? 

In  the  first  case,  A  hires  a  house ;  when  the  term  of  his  lease 
has  expired  he  may  surrender  the  house.  He  incurs  no  pecu- 
niary obligation  for  the  principal  sum  involved.  When  he  has 
surrendered  the  property  and  paid  the  rent  his  debt  is  cancelled. 

But  when  A  borrows  two  thousand  dollars  in  money,  the 
money  does  not  remain  in  his  possession.  Money,  to  be  used, 
must  be  spent.  It  is  invested  in  other  property  and  made  sub- 
ject to  the  contingencies  of  commerce ;  through  fluctuations  in 
value  it  may  be  lost,  and,  when  the  time  for  payment  of  princi- 
pal and  interest  arrives,  A's  ability  to  pay  may  be  contingent 
upon  his  success  in  trade  or  his  ability  to  sell  property  at  fair 
values.  In  the  mean  time  values  may  have  changed,  or  the 
market  may  have  become  stagnant,  and  sales  may  be  impracti- 
cable. A  being  unable  to  pay  the  debt  when  it  matures,  the 
loan  must  be  renewed  or  replaced  by  other  loans  at  a  higher 
rate  of  interest,  perhaps,  and  the  final  result  may  be  an  unforeseen 
sacrifice  of  A's  property. 

Eent  is  discharged  in  the  ordinary  course  of  current  expendi- 
ture. The  amount  bears  a  definite  relation  to  the  renter's 
income,  and  no  liability  is  incurred  which  may  involve  him  in 
unforeseen  financial  embarrassment.  At  the  end  of  the  month  or 
the  year  he  may  surrender  the  property,  and  rent  other  property 
at  a  lower  rental,  if  circumstances  require  that  he  should  do  so. 

Pressed  by  necessit}^  or  encouraged  by  hopes  of  profit  in 
business  which  often  prove  delusive,  the  majority  of  borrowers 
are  ever  ready  to  pay  a  higher  rate  of  interest  than  they  can 
afford.  The  number  of  borrowers  is  great,  and  competition  is 
strong;  while  the  hoarded  wealth  of  the  country  is  in  relatively 

V*-^  OP  THE     ^.^^ 


176  THE   DISTRIBUTION   OP   WEALTH. 

few  hands,  and  competition  among  those  who  loan  is  compara- 
tively weak.  They  are  not  pressed  by  any  peremptory  necessity ; 
they  may  await  opportunity,  and  often  profit  most  by  the  mis- 
fortunes of  others.  The  rate  of  interest,  when  not  restrained  by 
usury  laws,  finds  its  only  efi"ective  limitations  in  the  ability  and 
disposition  of  the  workers  to  narrow  the  general  margin  of 
profits  which  represent  the  annual  contribution  of  labor  to 
capital. 

I  do  not  contend  that  the  law  should  not,  under  any  condi- 
tions, place  limitations  on  rent.  Eents  tend  everywhere  beyond 
the  limit  of  equitable  charges.  I  am  disposed  to  question  the 
claim  of  capital  to  profits  on  any  ground  other  than  that  of 
public  policy  and  the  social  utility  of  reasonable  accumulations 
of  wealth.  They  are  an  industrial  necessity,  and  afford  a  prac- 
ticable means  for  utilizing  the  social  and  industrial  energies  of 
the  people. 

The  details  of  every  commercial  transaction  cannot  be  sub- 
jected to  rules  defined  by  legislative  acts.  The  law  should 
interfere  only  where  it  is  practicable  to  accomplish  results  fully 
adequate  to  compensate  for  whatever  inconvenience  or  sacrifice 
of  individual  freedom,  or  other  evil,  which  the  operation  of  the 
law  may  occasion.  Otherwise,  the  remedy  may  be  worse  than 
the  disease. 

Ordinarily,  the  determination  of  values  must  be  left  to  the 
law  of  supply  and  demand  and  to  the  contracting  parties. 
There  are,  however,  many  recognized  exceptions :  charges  for 
railway  transportation,  ferriage,  hack-fare  are  recognized  as  sub- 
ject to  legislative  control.  The  law  of  supply  and  demand  is 
not  in  such  cases  fully  operative.  The  subject  here  is,  in  its 
nature,  such  that  it  may  be  brought  under  the  operation  of 
legislative  restrictions.  Legislation  is  justified  because  it  is 
practicable. 

Ordinarily  the  field  is  left  to  the  law  of  supply  and  demand, 
not  because  this  law  always  fixes  just  prices,  but  because,  in 
general,  it  secures  a  nearer  approximation  to  equitable  prices 
than  is  attainable  by  the  operation  of  any  law  which  could  be 
formulated  in  a  statutory  enactment. 

When  the  law  of  supply  and  demand  is,  from  any  cause,  not 
reasonably  effective  to  prevent  extortion,  then  the  government 


THE  DISTRIBUTION  OP  WEALTH.  177 

is  justified  in  interfering,  if  in  such  case  it  be  practicable  to 
secure  equitable  results  by  means  of  legislation.  The  question 
then  becomes  one  of  policy  and  not  of  right.  Government 
interference  is  in  itself  an  evil.  Legislative  laws  are  clumsy 
remedies,  and  liable  not  only  to  fail  in  the  accomplishment  of 
the  results  aimed  at,  but  also  to  produce  unlooked-for  effects  not 
less  injurious  to  society  than  the  evils  sought  to  be  repressed. 
Commercial  intercourse  ought  to  be  lefl  as  free  from  restraint 
as  possible.  The  advantages  which  one  man  may  obtain  over 
others  by  reason  of  superior  energy,  skill,  or  foresight,  or  even 
by  deceit,  within  certain  limits,  the  law  wisely  permits.  The 
jostling  of  the  crowd  cannot  be  prevented.  In  the  great  strug. 
ling  mass  of  humanity,  where  the  people  are  all  endeavoring  to 
climb  on  top  of  one  another,  the  law  cannot  always  keep  the 
strong  from  trampling  upon  the  weak,  but  it  may  impose  re- 
straints and  establish  limits. 

Limitations  upon  rent-charges  would  involve  a  question  as  to 
the  value  of  each  lot  or  tract  of  land  rented.  There  being  no 
uniform  standard  for  determining  that  value,  every  case  of 
renting  would  involve  an  appraisement  of  value  by  some  au- 
thorized  agent  of  the  government,  and  values  being  a  matter 
of  opinion,  fluctuating  and  uncertain,  a  law  limiting  rent-charges 
would  not  only  involve  unusual  diflSculties  in  its  enforcement, 
but  would  fail  in  its  purpose  of  uniformity  of  price  according  to 
values. 

In  regulating  interest-charges  neither  of  these  difficulties  is 
met  with.  Usury  laws  are  practicable  and  easily  enforced. 
They  are  uniform  in  operation  and  certain  in  their  effects.  A 
law  limiting  the  price  of  clothing  or  of  provisions  tends  to  di- 
minish the  supply.  A  law  limiting  rate  of  interest  does  not 
tend  to  diminish  the  supply  of  capital,  except  where  the  law  is 
of  local  application.  In  the  following  States  there  is  no  limit 
on  the  rate  of  interest  which  may  be  reserved  by  contract: 
California,  Colorado,  Maine,  Massachusetts,  Nevada,  and  Rhode 
Island.  In  Arkansas,  District  of  Columbia,  Iowa,  Michigan, 
Minnesota,  Mississippi,  Missouri,  Nebraska,  Oregon,  South  Caro- 
lina, and  Wisconsin  the  limit  is  ten  per  cent.  In  Kansas  and 
Texas  the  limit  is  twelve  per  cent.  In  Alabama,  Georgia,  Illi- 
nois, Indiana,  Louisiana,  North  Carolina,  and  Ohio  the  limit  is 

12 


178  THE   DISTRIBUTION  OF  WEALTH. 

eight  per  cent.  In  Connecticut,  Delaware,  Kentucky,  Mary- 
land, New  Hampshire,  New  Jersey,  New  York,  Pennsylvania, 
Tennessee,  Yermont,  Virginia,  and  West  Virginia  the  limit  is 
six  per  cent.  The  laws  of  each  State  prescribe  a  legal  rate  to 
govern  in  cases  where  no  specific  rate  is  fixed  by  contract. 

The  right  of  the  government  to  limit  the  rate  of  interest 
which  may  be  collected,  and  the  sound  policy  of  legislation  pre- 
scribing limitations  on  charges  for  the  use  of  money  being  con- 
ceded, we  come  to  the  question,  what  rate  should  be  permitted  ? 

This  inquiry  involves  the  consideration  not  only  of  the  ques- 
tion what  rate  of  interest  can  A,  B,  and  C  afford  to  pay,  or 
what  are  the  average  returns  of  capital,  but  how  is  society  in 
general  affected  by  interest-charges  ?  What  does  interest  have 
to  do  with  the  great  economic  problem,  the  distribution  of 
wealth  ?  If  the  effect  of  a  high  rate  of  interest  does  not  extend 
beyond  the  borrowers,  society  is  not  so  deeply  concerned ;  but 
if  the  effect  extends  to  the  whole  people,  directly  involving  the 
welfare  of  the  entire  working  population,  there  is  then  a  potent 
reason  for  the  enactment  and  enforcement  of  laws  limiting 
interest  to  a  low  rate. 

The  functions  of  money  are,  first,  to  afford  a  definite  standard 
or  measure  of  values  ;  second,  to  supply  a  medium  by  which  the 
exchange  of  other  property  may  be  conveniently  effected ;  and, 
third,  to  afford  a  medium  for  the  temporary  storage  of  wealth. 

To  illustrate  the  use  of  money,  as  well  as  the  dependence  of 
labor  upon  capital,  let  us  suppose  the  existence  of  a  community 
under  the  conditions  here  described.  Severed  from  all  connec- 
tion with  the  world  of  commerce,  there  is  a  community  con- 
sisting of  one  thousand  workers  and  their  families.  This  com- 
munity is  in  possession  of  all  kinds  of  modern  tools,  devices, 
and  machinery,  and  each  industry  is  supplied  with  a  due  pro- 
portion of  workers.  There  is  convenient  access  to  all  the  ma- 
terials for  production.  All  property  is  owned  in  common,  and 
each  worker  willingly  performs  his  part.  The  capacity  to  pro- 
duce has  reached  that  point  where  the  labor  of  eight  hundred 
workers  out  of  the  one  thousand  is  adequate  to  the  production 
of  every  species  of  property  ordinarily  consumed  by  the  whole 
community.  The  excess  of  capacity  is,  therefore,  equivalent  to 
the  labor  of  two  hundred  out  of  the  one  thousand  workers. 


THE   DI8TKIBUTION   OF   WEALTH.  179 

But  the  dwellings  of  the  people  being  poor,  they  desire  better 
houses.  They  therefore  propose  the  erection  of  a  house  of 
the  value  of  one  thousand  dollars  for  each  family.  The  pro- 
ductive value  of  a  day's  labor,  measured  in  dollars,  is  equivalent 
to  1.66f.  There  are  three  hundred  working-days  in  a  year. 
Two  hundred  laborers  working  three  days  each  perform  six 
hundred  days'  labor,  the  equivalent  of  one  thousand  dollars. 
In  three  days,  therefore,  the  two  hundred  workers  will  build  one 
house  of  the  value  stated,  in  one  year  they  will  build  one  hun- 
dred houses,  and  in  ten  years  they  will  build  one  thousand 
houses,  or  one  house  for  each  family.  In  the  work  of  building 
are  embraced  the  furnishing  of  materials  and  every  stage  of 
preparation.  As  everything  is  owned  in  common,  the  workers 
and  their  families  are  all  the  while  supported  out  of  the  common 
fund,  and  no  money  is  needed.  As  a  result,  we  have  in  ten 
years  the  production  of  one  hundred  thousand  dollars'  worth  of 
property  in  excess  of  consumption,  and  an  equal  distribution  of 
the  product. 

In  this  scheme  I  have  not  overestimated  the  productive  ca- 
pacity of  labor  nor  the  excess  of  unemployed  labor.  In  a  com- 
munity so  organized,  if  such  organization  were  practicable, 
money  would  be  unnecessary,  and  gold  and  silver,  except  as 
useful  in  the  arts,  would  be  of  no  more  value  than  in  a  commu- 
nity of  beavers,  that,  without  machinery  or  tools  other  than 
their  teeth  and  tails,  without  any  medium  of  exchange  and 
without  credits,  manage  to  accumulate  considerable  wealth, 
without  producing  either  millionaires  or  tramps. 

But,  assuming  the  same  conditions,  except  as  to  community 
of  goods,  money  or  some  substitute  for  money  becomes  neces- 
sary. Houses  are  wanted.  There  is  a  surplus  of  labor  sufficient 
to  build  them  at  the  rate  described.  There  is  money  enough  in 
the  community  to  answer  the  purposes  of  exchange,  but  it  is 
equally  distributed,  each  of  the  one  thousand  workers  having 
twenty  dollars  and  no  more.  It  is  plain  that  no  man  can  enter 
upon  the  construction  of  a  house  that  will  cost  one  thousand 
dollars  with  only  twenty  dollars  at  command.  Each  member 
of  the  community  is  already  supplied  with  his  ratable  portion 
of  the  property  of  the  whole  community.  There  is  a  continual 
exchange  of  the  products  of  labor  which  are  consumed,  and  the 


180  THE   DISTRIBUTION   OF   WEALTH. 

equilibrium  of  wealth  is  all  the  while  preserved.  But  A  de- 
sires to  build  a  house  worth  one  thousand  dollars ;  how  shall  he 
proceed  ?  A  has  some  property,  but  only  such  as  he  requires 
for  his  own  use,  and  every  other  family  is  equally  well  supplied. 
If  he  would  sell  what  he  has,  there  are  no  purchasers.  No  one 
buys  property  to  rent,  because  there  are  no  renters.  No  man 
uses  the  property  of  another,  and  there  can  be  no  aggregation 
of  wealth  in  the  ordinary  way.  If  A  borrows  the  one  thousand 
dollars  in  small  amounts  from  each  worker,  how  will  he  be  able 
to  repay  it  ?  He  must  do  so  out  of  the  product  of  his  labor ; 
but  the  labor  of  each  individual  being  sufficient  for  his  support, 
though  A  can,  during  a  year,  perform  one-fifth  more  labor  than 
is  required  for  his  support,  the  equivalent  of  sixty  days,  or  one 
hundred  dollars,  and  in  ten  years  he  could  repay  the  one  thou- 
sand dollars;  yet,  there  being  no  market  for  extra  labor,  the 
way  is  blocked.  But,  if  every  other  man  will,  during  the  ten 
years,  build  a  house  of  the  value  of  one  thousand  dollars,  there 
will  then  be  a  market  for  the  surplus  labor  at  its  full  value. 
But,  since  it  is  probable  that  three-fourths  of  the  people  will  be 
satisfied  with  the  houses  they  have,  considering  that  economy 
consists  in  spending  as  little  as  practicable,  no  market  is  fur- 
nished for  the  extra  labor. 

The  foregoing  illustrates  the  condition  of  completed  develop- 
ment reached  by  old  communities,  called  by  writers  on  political 
economy  the  stationary  state,  and  shows  why,  with  an  abun- 
dance of  labor  at  command,  people  continue  to  live  in  poor 
houses,  without  the  luxuries,  and  often  without  the  comforts, 
of  life.  The  exchange  of  labor  is  limited,  not  only  by  economic 
conditions,  but  also  by  the  disposition  and  habits  of  the  people. 

Now,  suppose  that  in  the  community  of  which  we  have  been 
speaking  the  governing  power,  by  means  of  taxation,  collects 
from  each  of  the  one  thousand  workers  one  dollar,  and  builds  a 
house ;  then  in  the  same  manner  collects  another  one  thousand 
dollars  and  builds  another  house,  and  so  on  for  ten  years,  util- 
izing all  the  excess  of  labor.  Now,  at  the  end  of  the  ten  years, 
the  people  have  one  thousand  houses,  have  all  the  money  they 
had  before,  and  no  more,  and  in  the  mean  time  they  have  en- 
joyed all  the  comforts  and  luxuries  of  life  to  which  they  were 
accustomed. 


THE  DISTRIBUTION  OP  WEALTH.  181 

We  have  supposed  one  case  in  which  the  houses  were  built 
without  money,  and  another  in  which  money  was  employed 
much  the  same  as  bills  of  exchange  are  used.  In  either  case 
the  same  results  are  accomplished  by  the  same  amount  of  labor. 
In  the  latter  case,  instead  of  using  gold  and  silver,  the  govern- 
ment might  have  resorted  to  certificates  of  credit,  or  fiat  money, 
with  the  same  results. 

The  principle  here  illustrated  is  the  same  as  that  which  un- 
derlies the  success  of  building  and  loan  associations.  The  effect 
of  these  associations  is,  first,  to  encourage  the  saving  of  money 
by  furnishing  an  inducement  by  way  of  opportunity  for  imme- 
diate investment,  and  by  supplying  the  stimulant  which  springs 
from  the  concert  of  many  persons  together  pursuing  a  common 
purpose ;  and  second,  and  herein  lies  the  chief  value  of  these 
associations,  by  furnishing  a  market  for  labor.  A  cannot  build 
unless  he  can  exchange  his  labor  for  the  labor  of  others,  and  in 
this  manner  pay  the  cost.  He  cannot  exchange  his  labor  unless 
there  be  others  who  desire  to  build  also.  It  is  true  that  the 
round  of  exchange  is  not  confined  to  building  alone ;  all  occu- 
pations are  brought  within  the  circle  of  exchange.  But  the 
principle  illustrated  is  fully  operative,  and  the  building  effected 
by  the  agency  of  these  associations  is  largely  the  product  of 
labor  that  would  have  been  otherwise  unemployed, — an  addition 
to  what  would  have  been  the  product  of  all  the  industries  had 
this  work  not  been  performed.  ]N'o  more  successful  agency  for 
the  distribution  of  wealth  has  ever  been  devised.  Thousands  of 
workingmen  have  secured  homes  of  their  own,  while  thousands 
more  have  derived  advantage  in  the  way  of  reduced  rents. 

These  associations  should  be  confined  within  the  scope  of  their 
original  design,  and  should  not  be  made  a  mere  medium  for  the 
purpose  of  loaning  money.  Aggregated  capital  should  not  be 
permitted  to  utilize  these  organizations  of  wage-earners  for  the 
purpose  of  absorbing  the  earnings  of  the  people  by  an  extension 
of  credits.  The  way  is  open  for  the  profitable  investment  of 
capital ;  the  people  may  not  be  quick  to  discern  the  danger,  and 
legislatures  should  be  prompt  in  surrounding  these  institutions 
with  the  necessary  safeguards  to  prevent  the  intrusion  of  ag- 
gregated wealth  into  this  field  of  investment. 

It  is  evident  that  money  produces  nothing.    A  may  collect 


182  THE  DISTRIBUTION  OF  WEALTH. 

together  one  hundred  thousand  dollars  in  money.  That  money- 
represents  80  much  stored  wealth,  and,  for  the  purpose  of  trans- 
fer and  of  the  temporary  storage  of  wealth,  money  is  convenient 
and  necessary.  But  if  A  locks  that  money  in  his  safe  for 
months  or  years,  he  does  society  an  injury.  In  equity  he  has 
no  right  to  hoard  it.  To  do  so  is  to  divert  it  from  its  legitimate 
use.  Society  is  entitled  to  it,  and  that,  too,  without  paying  a 
premium  on  its  use.  If  A  does  not  desire  to  exchange  it  for  the 
products  of  labor,  society  is  entitled  to  that  money  without  in- 
curring any  obligation  other  than  for  the  return  of  a  like  sum 
when  A  may  require  it  for  the  purpose  of  expenditure.  If, 
then,  A  loans  the  money,  he  is  entitled,  first,  to  compensa- 
tion for  any  risk  of  loss  he  may  incur ;  and,  second,  to  compen- 
sation for  the  work,  care,  and  skill  required  in  loaning  and 
collecting  it.  To  anything  more  he  has  no  claim,  except  upon 
the  ground  of  public  policy,  which,  for  the  general  good,  per- 
mits and  encourages,  within  proper  limits,  accumulations  of 
wealth  beyond  the  actual  earnings  of  any  individual  worker. 

But  a  question  of  this  character  must  be  considered  in  its 
practical  bearings,  and  not  alone  from  the  stand -point  of  abso- 
lute equity  as  involved  in  a  particular  transaction. 

At  three  per  cent.,  any  sum,  at  compound  interest,  will  double 
itself  in  twenty-three  years  and  one  hundred  and  sixty-four 
days.  At  four  per  cent.,  any  sum  will  double  itself  in  seventeen 
years  and  two  hundred  and  forty-six  days  j  at  five  per  cent.,  in 
fifteen  years  and  seventy-five  days ;  at  six  per  cent.,  in  fourteen 
years  and  three  hundred  and  twenty  seven  days;  at  seven  per 
cent.,  in  ten  years  and  eighty-nine  days ;  and  at  eight  per  cent., 
in  nine  years  and  two  days. 

At  three  per  cent,  compound  interest,  in  ten  years  one  thou- 
sand dollars  will  amount  to  one  thousand  three  hundred  and 
thirty-one  dollars  and  thirty-five  cents.  In  other  words,  the 
savings  of  one  thousand  dollars  at  three  per  cent,  compound  in- 
terest, in  ten  years  amount  to  three  hundred  and  thirty-one 
dollars  and  thirty-five  cents ;  and  at  three  per  cent,  simple  inter- 
est to  three  hundred  dollars. 

The  census  reports  of  1870  and  1880  show  that  the  entire 
savings  from  the  labor  product  of  the  whole  people  amount  to 
less  than  ninety  dollars  per  capita.    This  would  make  the  sav- 


THE  DISTRIBUTION   OF  WEALTH.  183 

ings  to  each  average  worker  equal  to  two  hundred  and  seventy 
dollars  in  ten  years,  supposing  the  increase  of  wealth  to  be 
equally  distributed  and  the  whole  amount  to  be  credited  to 
labor.  But,  since,  as  I  have  already  shown,  more  than  the 
amount  of  increase  in  wealth  has  been  absorbed  by  capital,  and 
nothing  is  left  to  the  account  of  labor,  the  account  stands  thus : 
Average  savings  for  one  laborer  in  ten  years,  nothing;  savings 
of  one  thousand  dollars  in  ten  years  at  three  per  cent,  interest, 
three  hundred  and  thirty-one  dollars.  There  are  no  statistics 
which  furnish  the  data  necessary  to  determine  the  total  of  the 
interest  bearing  credits  of  the  United  States ;  but  the  amount 
will  at  the  present  time  approximate  the  sum  of  fifteen  billion 
dollars,  which,  at  six  per  cent.,  would  in  ten  years,  at  compound 
interest,  amount  to  twenty-six  billion  seven  hundred  and  ninety 
million  dollars, — a  gain  of  eleven  billion  seven  hundred  and 
ninety  million  dollars.  At  three  per  cent,  compound  interest 
the  gain  would  be  four  billion  nine  hundred  and  sixty-five  million 
dollars.  It  is  true  that  a  considerable  portion  of  these  credits 
do  not  constitute  a  part  of  large  fortunes ;  but  two-thirds  of  the 
w^hole  amount  may  be  set  down  to  the  credit  of  unduly  aggre- 
gated wealth.  It  will  be  seen  that  interest  is  a  most  potent 
factor  in  the  aggregation  of  wealth, — a  power,  in  the  presence 
of  which  labor  is  absolutely  helpless.  It  is  true  to-day,  as  of 
old,  that  "  to  him  that  hath  shall  be  given,  and  he  shall  have  an 
abundance ;  while  from  him  who  hath  nothing,  shall  be  taken 
away  that  which  he  already  hath." 

There  is  another  effect  of  interest  not  yet  considered.  The 
rate  of  interest  is  everywhere  accepted  as  a  measure  of  the 
profits  of  invested  capital.  When  money  is  worth  eight  per 
cent.,  it  will  not,  as  a  rule,  be  invested  in  any  business  with  a 
prospect  of  lower  profit.  If  A  has  a  house  to  rent  which  rep- 
resents two  thousand  dollars  of  invested  capital,  the  rent  is 
fixed  on  the  basis  of  the  rate  of  interest  which  money  will  com- 
mand. A  says  this  house  is  worth  two  thousand  dollars ;  eight 
per  cent,  on  two  thousand  dollars  is  one  hundred  and  sixty 
dollars,  therefore  I  must  have  one  hundred  and  sixty  dollars 
per  year,  and  enough  more  to  cover  taxes,  cost  of  repairs,  the 
annual  wear  and  tear  of  the  property,  and  something  more  for 
the  trouble  of  looking  after  the  property,  collecting  rents,  etc. 


184  THE  DISTRIBUTION   OF   WEALTH. 

If  money  was  worth  but  three  per  cent.,  sixty  dollars  would 
take  the  place  of  one  hundred  and  sixty  dollars  in  determining 
the  rental  value.  The  manufacturer  makes  the  interest  value 
of  money  the  basis  of  his  calculations  in  estimating  the  profits 
which  he  must  derive  from  his  investment.  That  a  certain 
equilibrium  will  always  be  preserved  between  the  interest  value 
of  money  and  the  profits  of  invested  capital  is  too  evident  to  re- 
quire elaborate  illustration.  The  enforced  reduction  of  interest 
throughout  the  entire  country  would  tend  to  a  large  reduction 
of  the  profits  on  invested  capital  and  effect  a  wider  distribution 
of  wealth.  Greater  steadiness  would  be  given  to  values,  specu- 
lation would  be  largely  eliminated,  the  burdens  of  labor  would 
be  lightened,  the  tightening  grasp  of  capital  on  the  productive 
forces  of  the  nation  would  be  relaxed,  and  the  savings  of  the 
people,  instead  of  being  rolled  into  the  fortunes  of  millionaires, 
would  be  distributed  among  the  workers. 

Mill  says,  "The  price  of  land,  mines,  and  all  other  fixed 
sources  of  income  depend,  in  like  manner,  on  the  rate  of  interest. 
Land  usually  sells  at  a  higher  price,  in  proportion  to  the  income 
afforded  by  it,  than  the  public  funds.  .  .  .  When  interest  is 
low,  land  will  naturally  be  dear;  when  interest  is  high,  land 
will  be  cheap." 

This  is  true.  Land  being  a  fixed  quantity,  the  ownership  of 
land  constitutes  a  monopoly ;  and  in  a  country  like  England, 
where  the  area  is  fully  occupied  and  cultivation  has  reached 
near  the  limit  of  power  to  produce,  and  the  agricultural  product 
cannot  be  increased  by  the  employment  of  additional  capital, 
the  reduction  of  the  rate  of  interest  will  effect  an  increase  in  the 
money  value  of  land,  and  will  not  tend  materially  to  reduce  rent 
or  the  value  of  agricultural  product.  In  the  United  States, 
however,  where  there  is  room  for  the  abundant  increase  of 
capital  in  agriculture,  the  rule  does  not  hold  good.  The  ten- 
dency here  would  be  to  reduce  rent  wherever  it  is  excessive,  as 
compared  with  other  values.  But  when  in  this  country,  as  in 
England,  the  limit  of  the  possible  agricultural  product  is  ap- 
proximated, agricultural  values  will  be  pressed  upward,  and 
will  require  the  restraint  of  foreign  competition  and  statutory 
limitations  on  the  ownership  of  land.  Whenever  there  is  a 
monopoly  in   any  form  of  production,  prices  are,  in  a  great 


THE  DISTRIBUTION  OP  WEALTH.  186 

measure,  released  from  the  effect  of  the  laws  of  competition  and 
from  the  economic  forces  to  which  other  industries  are  subject. 
But  in  any  case  a  low  rate  of  interest  tends,  after  a  certain 
point  has  been  passed,  to  reduce  rents.  Since  the  overflow  of 
accumulated  capital  must  be  invested  in  the  competing  indus- 
tries, and  the  general  tribute  which  labor  pays  to  capital  is 
reduced,  the  portion  appropriated  to  wages  or  earnings  of  labor 
is  therefore  greater,  and  average  wages  must  be  higher.  From 
the  indirect  or  secondary  effects  of  a  low  rate  of  interest,  rents, 
though  intrenched  behind  the  power  of  monopoly,  cannot 
escape. 

It  is  not  necessary,  and  perhaps  not  advisable,  that  interest 
on  all  classes  of  loans  should  be  limited  to  the  same  rate. 
Where  loans  are  secured  by  mortgages  on  real  estate  estimated 
at  a  fair  valuation,  the  danger  of  loss  is  reduced  to  a  minimum ; 
and,  except  for  the  fluctuations  in  value,  caused  chiefly  by  the 
pressure  of  aggregated  capital  in  pursuit  of  illegitimate  profits, 
there  need  be  no  danger  at  all.  The  lowest  limit  may  therefore 
be  fixed  on  loans  of  this  character.  In  commercial  transactions, 
where  the  only  security  is  the  continued  personal  responsibility 
of  the  makers  and  indorsers  of  commercial  paper,  the  rate  might 
be  somewhat  higher,  but  the  margin  of  difference  should  not 
exceed  one  or  two  per  cent.  The  policy  of  the  law  should  be  to 
discourage  speculative  enterprise  and  to  favor  steady  values. 
Traders  burdened  with  heavy  interest  obligations  are  always 
under  the  spur  of  the  necessity  to  make  large  profits,  and 
thereby  become  the  natural  enemies  of  the  workers,  whose  share 
of  the  product  diminishes  in  the  same  ratio  that  profits  increase. 

Since  the  chief  objection  to  a  high  rate  of  interest  is  founded 
upon  the  fact  that  interest  is  one  of  the  principal  agencies 
through  which  aggregated  capital  in  the  hands  of  a  small 
number  of  persons  absorbs  the  earnings  of  the  people,  the 
reason  for  prescribing  a  low  limit  does  not  hold  with  the  same 
force  where  the  lenders  of  money  are  persons  of  small  means. 
It  is,  however,  ordinarily  impracticable  to  distinguish  between 
lenders,  and  all  must  come  within  the  operation  of  the  same 
rule,  unless  special  conditions  shall  furnish  the  opportunity  to 
discriminate. 

Building  and  loan  associations — institutions  which  are  co- 


186  THE  DISTRIBUTION  OF  WEALTH. 

operative  in  character — have  for  several  years  been  in  effective 
operation  in  almost  every  city  and  important  town  in  the 
country.  No  plan  has  been  hitherto  devised  by  which  working- 
people  could  combine  their  small  savings  so  as  to  secure  the 
necessary  capital  to  employ  labor  in  constructive  industry 
where  only  considerable  sums  are  available.  The  savings  of 
workingmen  are  too  small  in  amount,  too  slow  in  accumulation, 
to  be  available  for  the  purpose  of  building  a  home  or  other  in- 
dividual enterprise.  The  organization  of  building  and  loan 
associations  has  furnished  workingmen  the  opportunity  to  co- 
operate, and,  by  means  of  combination,  to  utilize  their  own 
labor  in  building  homes,  without  at  the  same  time  being  com- 
pelled to  abstain  from  the  enjoyment  of  the  usual  comforts  of 
life. 

How  many  families  there  are,  who  are  now  living  in  com- 
fortable homes  of  their  own,  who,  except  for  these  associations, 
would  be  paying  rents,  statistics  do  not  inform  us.  The  number, 
however,  is  very  large.  The  law  has  not  provided  for  statistics 
upon  this  subject.  The  curiosity  of  the  National  Bureau  of 
Statistics  has  not  yet  been  sufficiently  awakened  on  the  subject 
of  the  progress  of  the  workingman  to  divert  its  attention,  except 
during  periods  of  leisure,  from  the  task  of  counting  the  people 
and  summing  up  the  wealth  of  the  nation.  However,  from  the 
statistics  of  the  St.  Louis  building  associations,  just  at  hand,  we 
may  gather  an  idea  of  what  has  been  done.  There  are  in  St. 
Louis  one  hundred  and  five  associations,  averaging  two  thousand 
members  each.  The  monthly  dues  amount  to  two  hundred  and  ten 
thousand  dollars.  The  interest  paid  on  loans  averages  five  and 
one-half  per  cent.  At  the  date  of  the  July  statement  the  loans 
amounted  to  five  hundred  and  eighty-two  thousand  two  hundred 
and  ninety-one  dollars,  and  were  increasing  at  the  rate  of  two 
hundred  and  ten  thousand  dollars  per  month,  making  the 
volume  of  loans,  December  1,  1889,  about  ten  million  dollars. 
The  average  building  society  loan  in  St.  Louis  is  two  thousand 
six  hundred  dollars.  This  would  give  three  thousand  eight 
hundred  and  thirty-eight  houses.  The  monthly  savings  amount 
to  two  hundred  and  fifty-seven  thousand  seven  hundred  and 
fifty-one  dollars.  These  results  have  been  accomplished  within 
five  years.     In  these  associations  for  mutual  benefit  the  interest 


THE  DISTRIBUTION  OF  WEALTH.  187 

accumulations  are  distributed  on  an  equitable  basis  among  the 
stockholders  through  whom  they  are  derived,  and  serve  merely 
to  equalize  the  advantages  of  the  early  and  later  borrowers. 
An  interest  of  six  or  even  eight  per  cent,  is  not  open  to  serious 
objection. 

These  associations  are  most  effective  weapons  against  the 
power  of  aggregated  capital.  They  should  be  conducted  in  the 
interest  of  the  working-people,  and  should  not  be  given  over  as 
a  field  of  investment  for  accumulated  capital.  If  these  organi- 
zations are  continued,  and  in  their  operations  confined  to  the 
purpose  of  promoting  the  interests  of  the  working-people,  they 
will  soon  be  released  from  monthly  tribute,  in  the  form  of  rent, 
to  aggregated  wealth. 

The  residence  and  business  real  estate,  including  water-power, 
in  the  United  States  in  1880  was  estimated  at  nine  billion  eight 
hundred  and  eighty-one  million  dollars.  In  this  valuation  land 
is  included,  which  Mr.  Atkinson  estimates  at  from  one-half  to 
two-thirds  the  value  of  the  whole.  The  value  of  dwellings 
alone  probably  did  not  exceed  four  billion  dollars,  or  about 
eight-fifteenths  of  the  annual  product.  The  average  life  of  a 
dwelling  is  not  less  than  forty  years ;  certainly  not  less  if  we 
allow  for  the  greater  value'  of  the  more  durable  ones.  Five  per 
cent,  of  the  annual  product  is  sufficient  to  duplicate  these  build- 
ings in  ten  and  two-thirds  years  j  one  and  one-third  per  cent. 
will  duplicate  them  in  forty  years.  It  is  apparent,  therefore, 
that  in  a  short  time  a  steady  diversion  of  a  very  small  per  cent, 
of  the  labor  of  the  country  to  the  construction  of  dwellings 
would,  if  equitably  distributed,  supply  the  people  with  good 
homes  of  their  own.  And  to  three-fourths  of  the  people  of  a 
country  a  good  home  and  its  furnishings  must,  in  the  nature  of 
things,  constitute  the  limit  of  individual  wealth. 

In  order  to  secure  the  necessary  diversion  of  labor  to  the 
creation  of  this  form  of  durable  property,  in  which  the  product 
of  labor  may  be  saved  or  preserved  in  continued  use  during  a 
longer  period  than  in  any  other  form  of  product,  and  in  which 
form  it  therefore  yields  a  greater  measure  of  comfort  than  in 
any  other,  railway  freights  on  building  materials  should  be 
limited  to  actual  cost  of  carriage ;  capital  invested  in  railways 
should  derive  its  profit  out  of  charges  for  the  carriage  of  freights 


188  THE  DISTRIBUTION  OF   WEALTH. 

not  so  directly  associated  with  the  savings  of  the  people ;  build- 
ing associations  should  be  encouraged,  and  new  dwellings  occu- 
pied by  the  owners  should  be  exempted  from  taxation  during  a 
reasonable  period.  The  policy  of  the  law  should  be  such  as  to 
encourage  saving, — that  is,  the  conversion  of  labor  into  durable 
property  and  the  wider  distribution  of  its  ownership.  Saving 
in  the  other  sense  of  accumulating  credits  or  revenue-bearing 
property,  more  properly  described  as  the  centralizing  of  capital, 
needs  no  encouragement. 

This  plan  of  co-operation,  employed  by  building  and  loan 
associations,  with  such  modification  as  experience  may  suggest, 
may  doubtless  be  extended  along  other  lines,  in  effective  compe- 
tition with  accumulated  individual  wealth,  thus  opening  the  way 
for  a  practical  solution  of  the  greatest  problem  of  the  age, — the 
equitable  distribution  of  the  products  of  industry  and  the  steady 
employment  of  labor. 

The  question  naturally  arises.  If  interest  be  reduced  to  a  low 
rate  and  profits  on  invested  capital  be  cut  down,  how  shall 
adequate  provision  be  made  for  the  dependent  classes  who  now 
rely  upon  the  returns  of  a  small  amount  of  capital  ?  How  shall 
men  no  longer  able  to  work,  widows,  and  children  derive  their 
support  ? 

The  answer  is  that  a  wider  distribution  of  wealth  will  multiply 
the  number  of  small  fortunes.  The  number  of  those  who  now 
are  able  to  acquire  a  competence  is  comparatively  small. 

It  is  better  to  extend  to  the  workingman  an  opportunity, 
with  reasonable  exertion,  to  acquire  a  small  store  of  wealth 
which  may  constitute  a  fund  for  the  support  of  himself  in  sick- 
ness, and  of  his  family,  in  case  by  death  or  otherwise  they 
should  be  deprived  of  the  proceeds  of  his  daily  labor,  than  to 
pursue  a  policy  which,  while  it  may  enable  a  few  who  may  be  suc- 
cessful under  adverse  conditions  in  accumulating  wealth,  to  pro- 
vide what  will  be  a  more  adequate  support  for  those  dependent 
upon  them,  prevents  the  majority  from  making  any  provision 
at  all,  beyond  a  few  months*  subsistence  for  those  dependent 
upon  their  industry.  And,  besides,  women  and  children  make 
their  way  far  more  readily  in  a  community  where  labor  receives 
its  just  rewards,  than  in  a  community  where  the  earnings  of 
the  workingman  are  absorbed  by  exorbitant  interest,  rents,  and 


THE  DISTRIBUTION   OF  WEALTH.  189 

profits,  and  where  employment  is  rendered  uncertain  by  harsh 
conditions  prescribed  by  the  exacting  demands  of  capital  unre- 
strained by  the  power  of  organized  labor. 

But  I  believe  the  government,  as  the  representative  of  com- 
mon  interests,  as  the  agent  of  the  social  and  industrial  compact, 
may  well  extend  its  functions  in  behalf  of  the  dependent  classes. 

Suppose  the  State  or  national  government  should  issue  bonds 
bearing  an  annual  interest  of  six  per  cent.,  or  eight  per  cent.,  or 
ten  per  cent.,  made  payable  to  individuals  by  name,  in  amounts 
not  less  than  one  hundred  dollars  nor  more  than  three  thou- 
sand dollars,  these  bonds  to  be  issued  only  to  dependent  classes, 
such  as  widows  and  children  left  with  estates  under  the  value 
of,  say,  five  thousand  dollars,  or  such  other  sum  as  might  be 
thought  a  suitable  limit,  and  payable,  if  to  guardians  of 
children,  when  the  ward  should  attain  the  age  of  twenty  years, 
or  if  to  widows,  on  remarriage,  and  under  the  direction  of 
courts  of  probate,  and  through  the  agency  of  banks,  let  the 
money  of  these  dependent  classes  be  invested  in  these  bonds, 
what  reasonable  objection. could  be  urged?  The  benefits  of  such 
a  provision  might  be  extended  to  other  dependent  classes.  The 
money  so  received  could  be  used  by  the  government  as  other 
funds,  and  replaced  out  of  the  ordinary  revenues. 

Or,  in  lieu  of  the  foregoing,  a  certain  amount  of  railway  bonds 
might  be  set  apart  for  this  use,  and  if  all  workingmen  whose 
accumulations  have  not  exceeded  a  certain  amount  were  em- 
braced within  the  scope  of  the  policy  here  indicated,  such  meas- 
ure would  greatly  tend  to  reduce  inequalities  in  distribution 
which  result  from  undue  aggregations  of  wealth.  The  discrimi- 
nation here  suggested  would  be  a  discrimination,  not  between 
individuals,  which  would  be  unjust,  but  between  fortunes,  which 
would  be  both  just  and  practicable.  The  bonds  might  be  made 
to  bear  such  interest  above  the  ordinary  rate  as  the  State  should 
by  law  determine,  payable  out  of  the  earnings  of  railways,  which 
are  in  the  nature  of  a  tax  upon  the  industries  of  the  country, 
the  weight  of  which  rests  upon  the  whole  people  alike. 

This  plan  would  encourage  saving  among  the  common  people 
by  holding  out  a  special  inducement,  and  the  rate  of  interest 
would  be  little  more  than  that  which  the  people  at  large,  through 
the  agency  of  individuals,  now  pay  to  those  who  are  already  in 


190  THE  DISTRIBUTION   OF   WEALTH. 

posBession  of  vast  fortunes ;  for  the  interest  paid  by  individuals, 
where  it  goes  to  swell  the  already  overgrown  aggregations  of 
wealth,  is,  in  effect,  paid  by  the  working-people  at  large. 

By  this  method,  to  the  extent  that  it  should  be  employed,  the 
people,  as  a  whole,  would  become  the  borrowers.  They  would 
pay  interest,  not  to  capitalists  who  would  reloan  it,  but  to  con- 
sumers ;  they  would  therefore  pay  it  in  the  products  of  present 
industry,  and  the  burden  would  be  unfelt. 

If,  during  the  last  five  years,  there  had  been  deducted  from 
the  total  product  of  American  industry  a  sufficient  amount  to 
adequately  feed,  clothe,  and  house  five  hundred  thousand  of  the 
poorer  classes  in  this  country",  and  this  amount  had  been  con- 
ferred upon  them  as  a  gift,  the  American  people  would  have 
suffered  neither  diminution  of  wealth  nor  deprivation  of  the 
comforts  or  luxuries  which  they  have  enjoyed.  A  burden  of 
expenditure  resting  upon  the  whole  people,  so  adjusted  as  to  bear 
equally  upon  all,  is  not  felt.  It  is  derangement  of  the  industries 
and  imperfect  distribution  that  is  the  cause  of  suffering  and 
want. 

The  functions  of  the  State  might  be  still  further  extended. 
If  the  interest  on  loans  secured  by  real  estate  be  limited  to  three 
per  cent.,  the  State  might  itself  become  a  borrower,  issuing 
bonds  in  sums  of  fifty,  one  hundred,  two  hundred,  and  three 
hundred  dollars,  and  so  on,  and  reloaning  the  funds  so  received 
at  the  rate  of  three  and  one-half  per  cent.,  payable  semi- 
annually, secured  by  mortgage  on  real  estate,  the  amount  loaned 
not  to  exceed  two-thirds  the  value  of  the  security.  And  the 
State  might,  at  the  same  time,  become  an  insurer  of  the  build- 
ings on  the  real  estate  so  mortgaged.  In  Germany  a  plan  of 
government  insurance  has  long  been  in  operation,  and  I  see  no 
practical  difficulty  in  the  way  of  the  government  performing 
this  service.  In  England  the  cost  of  insurance  is  little  more 
than  one-fourth  the  cost  in  the  United  States,  the  ratio  being  as 
25  to  90.  The  losses  paid  in  the  United  States  average  a  little 
more  than  two-thirds  of  the  amount  of  the  premiums  paid, 
indicating  large  expenses,  as  well  as  large  profits,  to  insurance 
companies. 

This  plan  would  greatly  narrow  the  field  wherein  aggregated 
wealth  now  gathers  its  profits. 


THE   DISTRIBUTION   OF   WKA.LTH.  191 

This  would  not  accord  with  the  theories  of  political  econo- 
mists, of  whom  Professor  Cairnes  says  their  "  decrees,  ordinarily 
i^iven  to  the  world  in  the  name  of  political  economy,  amount, 
in  the  main,  to  a  handsome  ratification  of  the  existing  form  of 
society  as  apparently  perfect;"  but,  without  any  violent  de- 
parture from  the  existing  order,  would  afford  a  practical  test  of 
the  principle  of  industrial  co-operation,  under  conditions  favor- 
able to  success.  Many  States  have  adopted  the  policy  of  ac- 
cumulating funds  for  educational  purposes,  and  loaning  them  to 
citizens  through  oflScial  agents,  and  I  have  not  learned  that 
any  but  good  results  have  followed  the  experiment.  So  long  as 
the  interest  should  be  paid,  the  State  would  be  under  no 
necessity  of  requiring  the  principal,  and  depression  of  values  occa- 
sioned by  forced  collections  would  not  occur.  The  borrower 
might  be  permitted  to  repay  his  loan  in  instalments  of,  say, 
fifty  dollars  at  any  time;  and  the  collections  over  the  State 
would  be  sufficiently  uniform  in  volume,  so  that  the  amount — 
which  need  not  be  large — necessary  to  be  kept  on  hand  to  meet 
current  demands  could  be  readily  determined. 

The  plan  suggested  involves  no  complex  system  of  accounts, 
no  necessary  increase  in  the  number  of  officials,  no  higher  order 
of  skill  than  that  required  by  the  duties  of  county  officials  at 
present,  and  need  involve  no  considerable  additional  expense. 

The  adoption  of  a  low  rate  of  interest  would  involve  the 
necessity  of  relieving  credits  from  taxation.  The  tax  on  credits 
is  a  double  tax  that  has  no  equitable  basis  and  cannot  be  justi- 
fied on  the  ground  of  public  policy.  This  subject  is  discussed  in 
the  chapter  on  taxation. 

I  am  aware  that  a  low  rate  of  interest,  unless  supplemented 
by  some  limitations  on  the  ownership  of  real  estate,  while  it 
would  check,  would  not  prevent  a  rapid  growth  of  aggregated 
wealth.  There  must  be  some  outlet  for  the  overflow  of  profits 
which  capitalists  and  their  families  are  unable  to  consume,  for 
profits  must  come  within  the  limit  of  opportunities  for  invest- 
ment. When  interest  is  materially  reduced,  surplus  capital  will 
begin  to  absorb  the  real  estate  of  the  country  at  a  far  more 
rapid  rate  than  now.  High  rates  of  interest,  combined  with  the 
unprofitable  condition  of  agriculture,  have  caused  investments 
to  take  the  form  of  mortgage-loans ;  but,  when  driven  out  of 


192  THE   DISTRIBUTION  OF   WEALTH. 

mortgages  by  a  reduced  rate  of  interest,  capital  will  burrow  in 
the  earth.  Even  now,  in  the  most  productive  counties  in  the 
comparatively  new  State  of  Illinois,  from  one-half  to  three- 
fourths  of  the  land  is  cultivated  by  tenants. 

Even  John  Bull  is  permitted  to  bore  into  Uncle  Sam's  cider- 
barrel,  and  insert  his  siphons  at  will.  And  our  American  people 
are  foolish  enough  to  believe  that,  for  gold  and  silver,  they  can 
afford  to  barter  away  their  lands  and  their  industries  to  foreign 
capitalists.  There  is  no  consideration  adequate  to  justify  a 
prosperous  people  imposing  upon  themselves  the  obligation  of 
perpetual  tribute  to  foreign  wealth.  As  I  have  sought  to  show, 
the  wealth  of  the  country,  like  its  lands,  is  limited.  If  our 
factories  and  iron-mills  and  breweries  are  sold  to  Englishmen  at 
a  good  round  price,  we  may  congratulate  ourselves  that  we  have 
the  money  to  build  more  and  better  ones,  but  we  cannot  afford 
to  build  more  than  enough.  The  Englishman  will  retain  what 
he  gets,  the  American  will  have  the  remainder.  After  the  Eng- 
lishman has  obtained  a  foothold,  when  the  Yankee  under- 
takes to  crowd  him  to  the  wall  with  competition,  he  will  dis- 
cover that  the  economies  of  a  people  who  insist  on  beef  three 
times  a  day  are  poor  weapons  with  which  to  vanquish  a  foe 
stolidly  content  with  cheese  and  porridge.  John  Bull  is  a  clever 
neighbor  as  a  visiting  acquaintance,  but  we  cannot  afford  to 
pension  him ;  we  cannot  afford  to  give  him  a  permanent  job, 
even  in  our  brewery.  We  have  ample  leisure  to  make  beer  for 
ourselves.  And,  as  for  his  capital, — his  money, — we  do  not 
need  it.  We  have  enough,  not  very  well  distributed,  but  the 
amount  is  ample,  and  millions  lie  idle  in  the  treasury. 


CHAPTEK  YII. 

TAXATION. 

We  will  now  consider  the  manner  in  which  public  revenues 
should  be  raised,  and  the  sources  from  whence  they  should  be 
drawn. 

In  matters  pertaining  to  taxation,  history  is  a  treasury  of  ex- 
perience ;  and  there  ought  to  be  no  great  difficulty  in  determin- 


THE  DISTRIBUTION  OP  WEALTH.  193 

ing  the  methods  best  adapted  to  the  attainment  of  desired  re- 
sults. Yet  there  is  great  apparent  difference  of  opinion  among 
those  who  assume  the  function  of  guiding  the  popular  mind, 
and  who  profess  to  be  seeking  the  same  ends.  I  am  not,  how- 
ever, fully  assured  that  the  conflict  of  theories  may  not  be  some- 
times accounted  for  by  the  purpose  to  serve  special  interests, 
which  often  warps,  when  it  does  not  conceal,  real  convictions. 
Nevertheless,  there  are  wide  differences  of  opinion  sincerely  en- 
tertained and  earnestly  supported  by  those  who  seek,  regardless 
of  special  interests,  to  promote  the  common  welfare. 

In  the  levy  of  taxes,  or  the  imposition  of  duties  on  imports, 
the  direct  purpose  is  to  secure  a  revenue  to  defray  the  expenses 
of  government ;  but  in  selecting  the  subject  of  taxation,  in 
apportioning  its  burdens,  and  in  prescribing  the  modes  of  collec- 
tion, the  leading  consideration  should  be  the  manner  in  which 
any  proposed  measure  will  affect  the  distribution  of  wealth. 
This  is  the  question  which,  more  than  any  other,  concerns  the 
welfare  of  the  people  as  a  whole.  There  are  other  considera- 
tions which  may  not  be  ignored,  but  which,  in  ordinary  times 
at  least,  should  be  subordinated  to  the  one  leading  purpose 
of  laying  the  burden  where  it  will  be  least  felt,  and  of  pro- 
tecting the  weaker  members  of  society  from  the  pressure 
of  those  economic  forces  against  which,  without  the  friendly 
aid  of  a  benign  public  policy,  they  are  unable  to  effectively 
contend. 

The  necessities  of  government  may  sometimes  be  so  urgent 
and  pressing  that  little  heed  can  be  given  to  the  ultimate 
equities  involved  in  the  mode  of  collecting  a  public  revenue ; 
but,  in  the  absence  of  peremptory  necessity,  every  measure  and 
every  method  should  find  its  principal  test  of  fitness  in  its 
collateral  effects,  as  an  economic  force,  in  the  adjustment  of  the 
industries  and  in  the  final  distribution  of  wealth. 

I  do  not  believe  in  the  theory  that  the  functions  of  govern- 
ment are  to  be  considered  as  necessarily  so  limited  and  auto- 
matic that  they  should  be  confined  to  those  ends  alone  that  lie 
in  the  line  of  the  most  immediate  and  direct  purpose  which  calls 
those  functions  into  exercise.  Government  should  be  inspired 
by  a  guiding  motive  that  looks  to  the  future  for  the  true 
measure  of  results.     It  is  confined  in  grooves,  in  order  to  give 

13 


194  THE  DISTEIBUnON  OF  WEALTH. 

certainty  and  safety  to  its  operations,  and  not  for  the  purpose 
of  impairing  its  efficiency  as  a  social  and  economic  power. 

DUTIES    ON    IMPORTS. 

The  sources  of  revenue  of  the  United  States  government  are 
customs  duties  and  internal  revenue  taxes.  Duties  are  levied 
on  a  large  number  of  articles,  but  chiefly  on  products  of  manu- 
facture and  a  few  agricultural  products  which  compete  with  the 
productions  of  our  own  people.  These  duties  are  levied  with  a 
view  to  encourage  the  home  production  of  the  articles  taxed. 
Those  duties  which  were  formerly  laid  upon  foreign  products 
that  do  not  compete  with  home  products  have,  with  few  ex- 
ceptions, been  repealed,  the  revenues  derived  from  them  being 
no  longer  required  to  meet  public  expenditures.  We  are  still, 
however,  collecting  a  revenue  of  nearly  sixty  million  dollars  per 
annum  from  imports  of  sugar, — an  article,  the  production  of 
which  in  the  United  States,  under  present  conditions,  appears  to 
be  limited  to  a  small  part  of  the  amount  required  for  consump- 
tion. The  duties  on  sugar,  which  amount  to  more  than  the 
duties  on  iron  and  steel  and  their  products,  and  more  than  the 
sum  of  the  duties  on  cotton  and  woollen  fabrics  combined,  are 
paid  by  a  larger  number  of  consumers  and  in  more  nearly  equal 
amounts  per  capita  than  any  other  tariff  duties. 

According  to  the  theory  of  those  who  contend  for  a  tariff  for 
revenue  only,  there  could  be  no  more  appropriate  subject  than 
sugar,  and  none  so  clearly  falling  under  all  the  conditions  in- 
volved in  that  theory,  except  tea  and  coffee,  which  are  articles 
of  universal  consumption  not  produced  at  home. 

If,  however,  in  levying  tariff  duties,  we  would  discriminate  so 
that  the  burden  of  the  tax  may  fall  chiefly  on  the  more  wealthy 
and  well-to-do  classes,  we  must  omit  the  food  products  con- 
sumed by  the  common  people,  which  we  are  compelled  to  im- 
port, and,  as  a  consequence,  if  duties  are  made  sufficient  to  meet 
the  demands  of  a  necessary  revenue,  higher  rates  must  be  laid 
on  articles  of  manufacture,  and  the  protective  character  of  our 
revenue  system  would  still  remain,  though  modified,  it  might 
be,  so  as  to  'shift  its  burdens  and  its  protective  benefits,  and 
somewhat  change  the  relative  values  of  the  products  of  the 
various  industries  affected. 


THE  DISTRIBUTION  OP  WEALTH. 


195 


Tariff  revenues  on  commodities  paying  $100,000  and  upwards 

for  the  year  ending  June  30,  1887,  and  exhibited  in  round 
numbers,  were  as  follows : 

Amount  of  Rate  of 

Articles.  Duty  col-  Duty. 

lected.  Per  cent. 

Animals $933,000  20 

Art-works 678,000  80 

Barley 1,034,000  16.8 

Books  and  printed  matter 684,000  25 

Brass  and  manufactures  of 171,000  42.13 

Bristles 174,400  16.08 

Brushes 168,000  80 

Buttons , 898,000  25 

Cement 220,400  20 

Chemicals,  drugs,  and  dyes 4,654,000  25  to  110 

Chiccoryroot 106,700  65.17 

Clocks,  watches,  and  parts  thereof 490,000  80 

Coal  (bituminous) 654,500  24.81 

Copper-ores 104,000  49.63 

Corsets 870,500  85 

Cotton  manufactures 11,710,000  40.17 

Earthen-ware  and  china  (mostly  decorated)  .    .    .  8,218,000  58.02 

Fancy  articles 8,000,000  41.04 

Fire-crackers 833,000  100 

Fish 612,000  21.72 

Flax,  hemp,  and  jute  textiles 9,498,000  28.10 

Fruits  and  nuts 4,210,000  27.90 

Furs 900,000  20 

Glass  and  glassware 4,910,000  69.01 

Gold  and  silver  manufactures 132,000  30 

Hats,  bonnets,  and  hoods 1,052,000  21.44 

Hay 157,500  18.89 

Hops 1,330,000  42.64 

Iron  and  steel  and  manufactures  of 20,718,000  40.92 

Jewelry 107,000  25 

Lead 223,000  68.97 

Leather  and  manufactures  of 8,287,000  80.06 

Liquors  (spirituous  and  malt) 7,402,000  72.68 

Marble 600,000    89  and  53 

Matting  and  mats 177,000  20 

Metals,  composition,  etc 698,000  32.21 

Musical  instruments   .... 403,000  25 

Oils,  fixed  and  expressed 270,000  25 

$86,178,000 


196  THE  DISTEIBUTION  OF  WEALTH. 

Brought  forward $86,178,000 

Paints  and  colors 400,000  32.73 

Paper  (writing)  and  manufactures  of  paper  .   .  425,000    21  and  25 

Precious  stones 1,053,000  10 

Provisions  (over  half-cheese) 430,000    24  and  30 

Kice  (cleaned) 758,958  113.03 

"    (granulated)  or  rice-meal 152,460  20 

Salt  in  bulk 284,010  79.68 

"     "   bags 392,855  39.30 

Seeds 172,000  20.36 

Silk  and  manufactures  of 15,541,000  49.71 

Soap 117,000  26.89 

Sugar 58,000,000  82.04 

Tobacco  and  cigars 9,128,000  83.32 

Vegetables  (potatoes,  pickles,  and  sauces)  ....  548,000  24.05 

Wood  and  manufactures  of 1,503,000  18.28 

"Wool  (unmanufactured) 5,900,000  36.08 

Woollen  manufactures 29,730,000  67.21 

Zinc,  spelter,  etc 111,500  46.35 

Total 1210,824,783  47.08 

Total  duties,  embracing  articles  omitted .    .     $217,286,893 

Value  of  articles  imported  on  which  duties  were  paid  ....      |450,325,331 

Average  rate  of  duty 47.08^ 

Value  of  articles  imported  free  of  duty 233,093,659 

Total  imports $683,418,990 

The  imports  not  embraced  in  the  above  h'st  consist  of  a  large 
number  of  articles  of  which  the  aggregate  amount  makes  up 
the  difference  between  the  totals  given  above. 

In  the  above  list  the  specific  duties  are  reduced  to  ad  valorem 
rates,  so  as  to  exhibit,  in  convenient  form,  the  duty  paid. 

It  will  be  observed  that  the  higher  rates  of  duty  are  laid  upon 
articles  of  luxury,  or  at  least  upon  those  articles  which  are 
chiefly  consumed  by  the  more  wealthy  and  well-to-do  classes. 
The  classes  of  imports  from  which  the  largest  revenues  are  de- 
rived are  barley,  liquors,  silk,  sugar,  tobacco  and  cigars,  chem- 
icals, fancy  articles,  fruits  and  nuts,  earthen-ware  and  china, 
flax,  hemp,  and  jute  textiles,  glassware,  hops,  iron  and  steel, 
leather  and  manufactures  of  leather,  precious  stones,  manufac- 
tures of  wood,  wool,  woollen  manufactures,  cotton  manufactures, 


THE  DISTRIBUTION  OP  WEALTH.  197 

hats  and  bonnets.  Aside  from  sugar  and  wool,  beer  and  hops, 
the  articles  of  the  classes  named  are  mostly  of  a  high  grade  of 
manufactured  articles  and  are  not  extensively  consumed  by  the 
masses  of  the  people.  Many  are  of  the  class  on  which  profits 
usually  range  higher  than  on  articles  of  more  universal  consump- 
tion. 

A  high  rate  of  duty  is  also  laid  upon  articles,  the  home  man- 
ufacture of  which  it  was  the  purpose  specially  to  encourage. 
Two  principles  of  discrimination  are  observed ;  the  duties  on 
rice  and  sugar  being  the  principal  exceptions  to  the  general 
policy  on  which  this  schedule  is  framed.  Sugar  is  the  product 
of  a  low  grade  of  labor,  and  the  industry  is  not,  therefore,  one 
which,  under  present  conditions,  should  be  encouraged. 

The  policy  of  our  American  system  of  revenue,  so  far  as  it 
relates  to  duties  on  imports,  may  be  defined  to  be  to  promote 
the  change  of  unskilled  labor  into  the  more  productive  and 
more  valuable  forms  of  labor,  by  diverting  it  from  the  more 
crude  and  unproductive  industries  to  those  industries  in  which 
the  products  of  the  same  number  of  laborers  possess  a  greater 
value,  generally  for  the  reason  that  it  is  applied  to  the  processes 
of  production,  through  the  agency  of  mechanical  devices  and 
machinery,  whereby  the  productive  power  of  the  same  labor  is 
greatly  multiplied ;  and,  second,  subject  to  the  first  and  principal 
aim,  to  so  levy  duties  that  the  great  burden  of  the  revenue  will 
rest  on  the  wealthier  members  of  society,  who  are  more  able  to 
bear  it,  rather  than  the  poorer  classes,  who  are  less  able.  That 
these  principles  are  observed  throughout  cannot  be  claimed  for 
the  present  schedule,  but  in  the  main  it  may  be  said  that  the 
duties  conform  to  the  policy  defined. 

BY  WHOM  ABE  DUTIES  PAID? 

It  may  be  well  to  consider  here  the  question  as  to  who  pays 
the  duties  on  foreign  imports.  John  Stuart  Mill,  the  leading 
English  writer  on  the  subject  of  political  economy,  and  an 
advocate  of  free  trade  in  the  most  unqualified  sense,  says,  "  The 
imposition  of  a  tax  on  a  community  almost  always  diminishes 
the  demand  more  or  less  j  and  it  can  never,  or  scarcely  ever, 
increase  the  demand.    It  may  therefore  be  laid  down  as  a 


198  THE  DISTRIBUTION   OF   WEALTH. 

principle,  that  a  tax  on  imported  commodities,  when  it  really 
operates  as  a  tax  and  not  as  a  prohibition  either  total  or  partial, 
almost  always  falls  in  part  upon  the  foreigners  who  consume 
our  goods ;  and  that  this  is  a  mode  in  which  a  nation  may 
appropriate  to  itself,  at  the  expense  of  foreigners,  a  larger  share 
than  would  otherwise  belong  to  it  of  the  increase  in  the  general 
productiveness  of  the  labor  and  capital  of  the  world,  which 
results  from  the  interchange  of  commodities  among  nations." 

I  do  not,  however,  perceive  the  necessity  of  looking  for  the 
result  at  the  end  of  a  route  so  circuitous.  It  is  a  principle 
universally  recognized,  that  the  price  of  a  commodity  is  not 
determined  alone  by  the  cost  of  production.  It  is,  in  fact,  de- 
termined by  the  demand  for  consumption.  Where  the  demand 
is  not  sufficient  to  absorb  a  product  at  a  price  which  is  a  fair 
measure  of  the  cost  of  production,  production  tends  to  diminish 
towards  the  point  where  the  values  of  the  product  rise  to  a  fair 
measure  of  the  cost  of  production.  The  change  is,  however, 
gradual,  and  in  the  adjustment  the  cost  of  production  is  itself 
lowered  by  a  reduction  of  wages  and  profits. 

If,  for  instance,  a  certain  amount  of  wheat  is  raised  in  Kansas 
and  shipped  to  New  York  City,  and  sold  there  for  one  dollar 
and  a  quarter  per  bushel,  the  freight  from  Kansas  to  New  York 
being  twenty-five  cents  per  bushel,  and  the  railways  increase 
their  charges  by  adding  twenty-five  cents  more  for  each  bushel 
of  wheat,  does  any  one  suppose  that  wheat  will  rise  to  one 
dollar  and  a  half  in  New  York  City  because  of  increased  rate 
of  transportation  ?  The  efi'ect  would  be  felt  chiefly  by  the  pro- 
ducer, the  Kansas  farmer.  If  the  people  of  the  United  States 
are  shipping  wheat  to  England,  and  wheat  is  selling  in  the 
market  there  at  the  rate  of  one  dollar  and  twenty-five  cents  per 
bushel,  and  the  cost  of  transportation  is  suddenly  raised  twenty- 
five  cents  on  the  bushel,  it  will  not  be  contended  that  wheat  in 
England  will  advance  to  one  dollar  and  fifty  cents.  If,  instead 
of  an  increased  cost  of  transportation,  England  levies  a  duty  on 
wheat  of  twenty-five  cents  per  bushel,  the  effect  is  the  same  as 
though  the  additional  charge  of  twenty-five  cents  per  bushel 
had  been  made  for  transportation.  If  England  is  selling  a 
certain  grade  of  woollen  goods  in  the  United  States  for  one 
dollar  per  yard,  and  an  import  duty  of  twenty-five  cents  per 


THE  DISTRIBUTION  OF   WEALTH.  199 

yard  is  laid  upon  that  grade  of  goods,  it  is  apparent  that  the 
people  of  the  United  States  will  at  once  greatly  reduce  their 
consumption  of  the  imported  cloth;  and,  in  order  to  get  a 
market,  the  English  manufacturer  must  sell  his  cloth  for  one 
dollar  and  ten  or  one  dollar  and  fifteen  cents  per  yard,  and  he  will 
reduce  the  cost  of  manufacture,  unless  his  profit  is  sufficient  to 
enable  him  to  make  the  reduction  in  price  without.  He,  like 
the  American  farmer,  must  have  a  market,  if  not  at  one  price, 
at  another.  So  that,  in  fact,  duties  on  foreign  imports  are  paid, 
in  part,  by  the  foreign  producer  and,  in  part,  by  the  home  con- 
sumer. How  the  rate  is  divided  depends  upon  the  commodity 
and  upon  the  home  competition.  On  silk  and  cotton  and 
woollen  goods,  and  on  iron  products  and  many  other  imports, 
the  foreigner  pays  from  one-fourth  to  one-half  the  duty.  It 
occasionally  happens  that  the  American  manufacturer  ships  his 
surplus  product  abroad  and  sells  it  for  less  than  it  is  sold  in  the 
home  market.  He  is  compelled  to  accept  the  conditions  which 
are  made  for  him.  The  duty  on  sugar  is  doubtless  paid  nearly 
altogether  by  the  consumer,  since  it  does  not  have  the  effect  to 
advance  the  price  beyond  the  point  where  consumption  is 
materially  reduced,  so  as  to  limit  the  demand  below  the  range 
of  the  usual  quality  of  product. 

It  is  true  that  the  foreign  people  who  receive  less  for  their  goods, 
to  the  extent  that  wages  are  reduced  will  be  compelled  to  reduce 
their  foreign  purchases.  The  reduction,  however,  falls  upon  the 
markets  of  all  countries  with  which  they  trade,  and  not  alone 
on  the  country  where  the  duty  is  imposed.  Where,  however, 
the  reduction  is  made  out  of  the  profits  of  the  manufacturer,  the 
demand  for  foreign  meats  and  bread-stuffs  continues  the  same,  the 
reduction  being  made  in  articles  of  luxury  and  such  others  as 
are  not  absolutely  necessary. 

There  are  other  considerations  involved  in  the  theory  of 
protective  duties  besides  those  set  forth  in  the  chapter  on  pro- 
tection. There  are  industries  which  in  themselves  do  not 
represent  the  most  productive  employment  of  labor,  but  which 
employ  labor  and  capital  that  would  otherwise  remain  idle,  or 
which,  because  they  constitute  a  valuable  part  of  some  general 
industry,  require  the  fostering  care  of  protective  duties.  Of 
this  character  of  industry  there  is  no  better  illustration  than 


200  THE  DISTRIBUTION  OP  WEALTH. 

sheep  and  wool  growing,  which,  except  for  considerations  of  this 
character,  would  not  fall  within  the  scope  of  any  sound  pro- 
tective policy.  A  consideration  somewhat  in  detail  of  the 
claims  of  this  industry  to  the  special  encouragement  which  pro- 
tective duties  may  afford  will  serve  to  illustrate  the  principles 
involved  in  the  protective  policy  in  application  to  other  indus- 
tries as  well. 

SHEEP   HUSBANDRY. 

Sheep  husbandry  furnishes  occupation  to  the  agricultural 
classes  during  the  winter  season,  and  thereby  employs  time 
that  would  be  otherwise  idle.  It  widens  the  field  of  occupation, 
of  interest,  and  of  intelligence.  Secondly,  there  is  in  this  country 
a  large  area  of  land  adapted  to  grazing,  but  not  adapted  to 
tillage,  which  would  be  brought  into  profitable  use  through  the 
extension  of  this  industry.  Thirdly,  sheep  raising  is  most  val- 
uable as  a  part  of  a  general  system  of  associated  husbandry.  It 
opens  the  way  for  a  proper  rotation  of  crops,  and  leads  to  the 
alternate  use  of  the  land  for  the  purposes  of  grazing  and  tillage, 
and  is  the  most  effective  means  for  preserving  and  increasing 
the  fertility  of  the  soil.  It  may  be  said  to  be  an  essential  part 
of  an  harmonious  and  economic  system  of  agriculture.  It 
possesses  a  moral  as  well  as  an  immediate  economic  value,  and 
may  be  indirectly  profitable  to  a  people,  and  yet,  in  its  imme- 
diate and  direct  results,  unprofitable  to  individuals.  But  why, 
it  may  be  asked,  are  not  these  considerations  sufficient  to  pro- 
mote, to  the  full  limit  of  its  utility,  the  extension  of  this  in- 
dustry without  the  aid  of  a  protective  tariff? 

The  farmer  is  governed  by  what  appears  to  be  his  immediate 
individual  interest ;  and  this  is  essentially  true  if  he  be  in  debt, 
for  then  he  is  without  choice. 

If,  during  the  last  five  years,  the  American  farmers  had 
raised  all  the  sheep  required  to  supply  the  home  market  with 
all  the  wool  which  has  been  consumed  in  this  country  during 
that  period,  even  though  the  prices  of  wool  had  been  even  lower 
than  those  which  did  prevail,  on  an  estimate  of  the  total  general 
result  is  there  any  doubt  but  what  the  agricultural  classes  would 
have  been  greatly  benefited  ? 

What  would  have  been  the  effect?    First,  our  product  of 


THE  DISTRIBUTION  OP  WEALTHT.  201 

wheat  and  corn  and  oats  would  have  been  less,  and  therefore,  as 
I  have  shown  elsewhere,  on  the  whole  of  greater  value.  The 
total  value  of  the  agricultural  crop,  including  sheep  and  wool, 
would  have  been  increased  in  an  amount  which  cannot  be 
definitely  estimated,  but  it  is  safe  to  say  by  the  amount  of  the 
value  of  the  increased  sheep  and  wool  product ;  and  I  believe 
that  the  increase  would  have  been  greater.  The  labor  required 
would  have  been  even  less  than  that  which  was  required  to 
produce  the  cereals  that  were  raised  during  that  period,  and 
somewhat  better  distributed  throughout  the  year.  Second,  the 
general  aterage  fertility  of  the  soil  would  have  been  increased. 
Last,  and  most  important  in  the  present  relation  of  our  indus- 
tries, the  agricultural  classes,  receiving  a  larger  sum  for  their 
total  product,  would  have  received  a  larger  proportionate  share 
of  the  general  product  of  the  whole  country,  and  thus  been  put 
more  nearly  on  a  level  with  the  manufacturing  industries. 

The  direct  result  would  have  been  a  small  increase  in  the 
value  of  certain  grades  of  woollen  goods  and  a  slight  advance  in 
the  price  of  food  products.  Agriculture  would  be  to-day  in  a 
more  healthy  and  prosperous  condition,  property  values  would 
be  somewhat  higher,  making  the  burden  of  credits  propor- 
tionately less,  and  the  labor  of  mechanics,  as  well  as  the  products 
of  manufactures,  would  have  been  more  in  demand.  The  weak- 
ening of  a  great  industry  interferes  with  that  steady  course  of 
production  and  consumption  which  is  essential  to  general  pros- 
perity, and  produces  that  condition  of  industrial  depression  by 
which  workers  in  the  various  industries  are  forced  out  of 
employment,  and  established  adjustments  of  wages  are  broken 
up.  Manufacturers,  always  on  the  alert  to  keep  production 
within  the  limits  of  the  effective  demand  at  good  prices,  regu- 
late their  working-force  as  their  immediate  interests  appear  to 
dictate,  and  the  constant  tendency  is  to  drive  larger  numbers 
of  workers  beyond  the  range  of  steady  and  profitable  industry. 
The  several  industries,  including  trade,  constitute  a  system  by 
which  people  effect  an  exchange  of  labor.  Whether  the  number 
employed  is  one  million  or  ten  millions  makes  no  difference  as 
to  the  individual  share  of  each.  But  the  system  is  like  a  clock ; 
the  wheels  must  be  adjusted  with  reference  to  each  other,  and 
all  must  move  together.    But  farmers,  being  individually  subject 


202  THE  DISTRIBUTION  OF  WEALTH. 

to  prevailing  conditions  which  they  could  not  change,  were  com- 
pelled to  pursue  a  course  which  many  knew,  but  which  the 
great  majority  could  not  well  know,  was  detrimental  to  their 
own  welfare.  Had  one  individual  reduced  his  grain  product  in 
order  to  grow  sheep  and  wool,  he  would  not,  simply  because  he 
had  raised  less,  have  realized  better  prices  for  his  grain,  since 
the  total  volume  of  the  grain  product  of  the  country  would  not 
have  been  perceptibly  affected  by  the  subtraction  of  a  few 
bushels,  and  what  he  would  have  lost  by  his  diminished  grain 
product  he  could  not  have  gained  from  his  wool,  it  being  in 
itself  less  profitable  than  grain.  To  effect  a  profitable  substitu- 
tion of  wool  for  grain,  such  as  would  reduce  the  grain  product 
in  sufficient  amount  to  advance  the  price,  required  the  combined 
action  of  the  farmers  of  the  nation,  which  could  be  secured  only 
by  a  policy  that  would  lead  farmers  in  general  to  substitute 
wool  in  place  of  a  part  of  the  grain  crop.  Farmers,  as  a  olass, 
cannot  be  expected  to  be  governed  by  the  incidental  value  of  an 
industry,  as  to  its  improvement  of  the  soil  or  its  effect  in  dis- 
tributing labor  throughout  the  seasons,  and,  when  disposed  to 
give  such  considerations  full  weight,  present  necessity  compels 
them  to  pursue  those  branches  of  agriculture  promising  the 
largest  immediate  returns. 

There  is  no  industry  which,  in  the  levy  of  duties  or  taxes, 
demands  more  consideration  than  that  of  agriculture  in  its 
present  condition  in  this  country.  For  there  is  no  industry  so 
helpless  against  destructive  competition ;  none,  the  annual  re- 
turns of  which  fluctuate  through  so  wide  a  range.  The  prin- 
cipal factor  in  modifying  the  effect  of  these  fluctuations  is  a 
diversity  of  production,  whereby  the  loss  on  one  article  is  made 
up  by  the  gain  on  another. 

The  time  is  coming,  however,  after  this  country  shall  be  more 
thickly  populated  than  now,  when  this  capacity  to  overweight 
the  markets  will  be  subjected  to  the  limitations  on  the  agricul- 
tural area,  and  the  farmer,  as  the  owner  of  a  natural  monopoly, 
instead  of  needing  the  aid  of  protective  duties,  will  become  a 
power  against  which  other  classes  may  require  the  protection  of 
foreign  competition  as  they  do  in  England  to-day.  But  policies 
must  be  adapted  to  prevailing  conditions ;  and  one  reason  for 
guarding  agricultural  interests  now  is  that  the  accumulation 


THE  DISTRIBUTION  OF  WEALTH.  203 

of  lands  in  large  bodies,  owned  by  single  individuals,  which 
must  result  from  the  long  continuance  of  present  conditions, 
may  be  prevented.  It  is  the  special  interest  of  the  American 
people  at  the  present  time  to  guard  against  monopoly  in  land. 
And,  aside  from  express  limitations,  no  remedy  can  be  made  so 
effective  as  properly-adjusted  revenue  laws. 

PASTURAGE   OP  THE   PUBLIC  LANDS. 

The  rapid  growth  of  the  cattle  industry  on  the  public  lands 
of  the  West  has  not  been  productive  of  good  to  the  farmers  as 
a  class  nor  to  the  people  as  a  whole.  This  appropriation  of  the 
public  domain  to  the  use  of  the  ranchmen  for  grazing  purposes 
constituted  a  most  effective  attack  of  accumulated  capital  on 
one  of  the  chief  branches  of  agriculture,  in  consequence  of  which 
that  industry  has  been  much  disorganized.  Destructive  compe- 
tition compelled  a  change  in  the  relations  of  the  different 
branches  of  agriculture  as  a  properly-organized  system  of  hus- 
bandry, in  the  interest  of  capitalists,  many  of  whom  were  not 
American  citizens, — a  change  disastrous  to  the  greatest  Ameri- 
can industry  in  its  immediate  results,  and  to  all  other  industries 
in  its  secondary  effects.  Had  a  sufficient  tax  been  laid  upon 
the  cattle  grown  upon  the  public  lands  to  have  prevented 
demoralizing  and  destructive  competition  with  a  leading  prod- 
uct of  an  industry  which  the  whole  body  of  agricultural  people 
were  directly,  and  other  classes  were  indirectly,  interested  in 
maintaining,  all  would  have  enjoyed  the  benefit  of  a  more 
healthy  industrial  condition. 

It  is  true  that  most  of  this  land  is  fitted  only  for  grazing,  and 
that  it  must  be  appropriated  to  that  purpose.  But  the  growth 
of  the  cattle  industry  in  the  public  lands  of  the  West  should 
have  been  restrained  to  a  pace  consistent  with  the  continued 
prosperity  of  agriculture  in  the  States.  The  notion,  so  generally 
inculcated,  that  cheap  bread  or  cheap  food  or  cheap  clothing  is 
to  be  desired,  even  at  the  expense  of  industrial  derangement, 
is  doubtless  responsible  for  the  neglect  to  guard  agriculture,  as 
an  organized  industry,  against  the  raid  of  ranchmen  and  cow- 
boys. 

Changes  even  in  the  direction  of  cheaper  production,  in  what- 
ever manner  they  may  be  brought  about,  whether  by  machinery 


204  THE  DISTRIBUTION  OF  WEALTH. 

or  by  the  stocking-up  of  the  wild  Western  ranges,  are  to  be 
encouraged  ;  but  the  more  steady  and  gradual  the  change,  as  a 
rule,  the  better  for  the  greater  number  of  people.  The  shifting 
of  labor  from  one  form  of  industry  to  another  is  always  a  slow 
process;  and  the  adjustment  of  the  different  branches  of  the 
agricultural  industry  proceeds  more  slowly,  and  is  effected  with 
greater  difficulty,  than  industrial  changes  in  general. 

Cattle,  horses,  and  sheep  require  years  to  mature  them ;  and 
an  overstocked  market  cannot,  as  in  the  manufacturing  indus- 
tries, be  relieved  by  a  sudden  diminution  of  the  product.  In 
agriculture  it  is  not  possible  to  determine  beforehand  what  the 
product  is  to  be,  for  statistics  do  not  furnish  the  required  infor- 
mation. The  statistical  information  furnished  by  the  Agri- 
cultural Department  is  generally  too  late  to  be  of  use  to  farmers 
in  regulating  production  according  to  the  measure  of  the  demand. 

Writers  on  political  economy  usually  proceed  on  the  tl^eory 
that  all  industries  will  promptly  adjust  themselves  to  the  effects 
of  competition,  however  violent  that  competition  may  be.  Noth- 
ing could  be  further  from  the  truth.  Labor  is  a  heavy  com- 
modity, not  susceptible  of  rapid  changes  of  form,  or  of  being 
promptly  shifted  from  one  locality  to  another  to  meet  the 
fluctuating  demands  of  trade.  Professor  Fawcett  says,  "  Dur- 
ing the  winter  months  an  ordinary  agricultural  laborer  in  York- 
shire earns  three  dollars  and  twelve  cents  per  week ;  the  wages 
of  a  Wiltshire  or  Dorchestershire  laborer,  doing  the  same  kind  of 
work,  and  working  a  similar  number  of  hours,  are  only  two 
dollars  and  sixteen  cents  a  week.  This  great  difference  in 
wages  is  not  counterbalanced  by  other  considerations-  Living 
is  not  more  expensive  in  Yorkshire  than  in  Dorchestershire ;  and 
the  Dorchestershire  laborer  does  not  enjoy  any  particular 
advantages  or  privileges  which  are  denied  to  the  Yorkshire 
laborer." 

Of  the  freedom  of  movement  from  one  industry  to  another, 
says  Professor  Walker,  "  Professor  Caimes  sought  to  reach  a 
measure  of  the  rate  of  this  movement  in  England.  His  result 
was  substantially,  that  only  loss  by  death  or  disability  could  be 
relied  on  to  relieve  the  labor  market  in  any  branch  of  industry 
which  was  overdone ;  and  the  sole  disposable  fund  for  supply- 
ing new  laborers  to  new  and  growing  branches  of  industry  was 


THE  DISTRIBUTION  OF  WEALTH.  205 

to  be  found  in  the  body  of  persons  each  year  coming  of  age,  in- 
dustrially speaking. 

"  It  would  be  easy  to  show  that  the  play  thus  given  to  the 
labor  market  is  far  within  the  limits  of  the  great  oscillations  of 
industry  which  labor  must  meet  fully  and  promptly,  or  suffer 
because  it  cannot  meet  them." 

Professor  Walker  dwells  much  more  at  length  upon  the 
sluggishness  of  labor  in  adapting  itself  to  changing  conditions. 
The  remedy,  he  thinks,  must  be  found  in  some  plan  by  which 
these  movements  of  labor  may  be  accelerated.  It  appears  to 
me,  however,  that  the  policy  of  the  law  should  be,  so  far  as 
practicable,  to  protect  the  working-people  from  the  rush  of 
events  by  which  the  relations  of  the  industries  are  deranged. 
The  speed  of  genuine  progress  is  gauged  by  the  mobility  of 
labor.  Competition,  to  the  extent  that  it  is  useful,  should  he 
free ;  when  destructive,  it  should  be  restrained,  where  restraints 
may  be  applied  under  the  operation  of  general  and  practical 
laws,  that  permit  free  play  to  the  ordinary  movements  of  in- 
dustrial enterprise.  Because  competition  is  an  essential  factor  in 
production  and  distribution,  the  ready  inference  is  that  competi- 
tion should  never  be  restrained.  Thus  we  fall  into  careless 
generalizations,  that  take  no  account  of  important  distinctions 
to  which  exceptional  occasions  may  give  rise. 

If  it  be  the  chief  aim  of  civilization  to  gather  wealth  into  the 
hands  of  a  few,  to  build  palaces  for  princes,  and  adorn  their 
walls  with  the  works  of  highest  art,  the  political  economists  are 
right,  and  their  doctrines  need  no  amendment ;  but  if  the  pur- 
pose be  to  lift  the  common  people  to  a  higher  level  of  thought 
and  refinement  and  comfort,  their  theories  have  not  been  veri- 
fied by  results ;  the  march  of  civilization  has  left  too  many  be- 
hind; there  is  too  much  truth  in  the  statement  made  by  Mr. 
Carnegie,  that  the  contrast  between  the  palace  of  the  millionaire 
and  the  cottage  of  the  laborer  measures  the  change  which  has 
come  with  civilization. 

THE   BURDEN   OF    TAXATION. 

Taxes  are  a  public  necessity,  and,  to  the  extent  that  they  may 
be  required  for  legitimate  expenditures,  cannot  be  avoided. 
There  is  always  a  limit  within  which  taxes  may  be  confined, 


206  THE  DISTRIBUTION   OF  WEALTH. 

without  withholding  funds  which  may  be  considered  necessary 
for  public  uses,  and  beyond  which  the  question  is  always  open 
for  discussion  as  to  whether  the  best  interests  of  the  people  are 
subserved  by  the  collection  and  expenditure  of  public  revenues. 
The  burden  of  taxation  is  a  theme  entering  into  the  discussions 
of  every  important  political  campaign,  and  the  inquiry  arises.  To 
what  extent  are  taxes  a  burden  upon  the  people,  and  what 
degree  of  relief  might  be  expected  from  a  reduction  of  taxation  ? 
It  is  all-important  that  industrial  evils  should  be  traced  to  their 
true  sources,  and  that  we  should  measure  correctly  the  causes 
to  which  they  owe  their  origin. 

Mr.  Atkinson  is  accustomed  to  refer  to  taxation  as  though  the 
amount  of  taxes  paid  represented  so  much  taken  from  the 
pockets  of  the  people  which  they  would  otherwise  have  and  re- 
tain to  add  to  savings.  The  view  is  plausible,  and  generally 
goes  unquestioned,  but  is  it  true  ? 

The  taxes  paid  represent  a  certain  portion  of  the  annual 
product ;  according  to  the  estimate  I  have  made  of  the  total 
amount,  apparently  a  little  more  than  one-twelfth.  Since,  how- 
ever, a  considerable  portion  is  spent  for  public  buildings,  river 
and  harbor  improvements,  and  in  other  ways  embracing  a  part 
of  the  labor  which  has  already  been  included  in  the  total 
product,  the  proportion  is  something  less,  say  one-fifteenth. 
This  amount  may  be  said  to  represent  so  much  wheat,  so  much 
corn,  so  much  clothing,  iron,  carpentering, — in  short,  so  much 
labor.  We  may  say,  therefore,  that  one-fifteenth  of  the  labor 
of  those  engaged  in  productive  industries  was  consumed  in 
public  works,  and  in  food  and  clothing,  and  other  comforts  for 
government  employes,  pensioners,  public  creditors,  and  others. 
The  whole  matter  resolves  itself  into  a  question  of  the  consump- 
tion of  labor.  To  what  extent  did  the  people  deprive  them- 
selves of  what  they  otherwise  might  have  enjoyed,  by  expend- 
ing one-fifteenth  of  their  labor  in  this  manner?  It  is  a  question, 
first,  as  to  whether  the  people  have  that  amount  of  labor  to  spare. 

Among  the  employes,  whose  services  were  paid  for  out  of  the 
public  revenues,  were  two  hundred  and  twenty-seven  thousand 
teachers,  two-thirds  of  whom  were  women.  It  is  not  probable 
that  the  corn  crop  was  short,  that  the  iron  and  steel  product 
was  less,  or  that  even  the  supply  of  muslins  and  jeans  was  defi- 


THE  DISTRIBUTION  OP  WEALTH.  207 

cient,  because  of  this  diversion  of  labor.  But  a  largo  number  of 
men  were  also  employed  in  government  service,  who,  had  they 
not  been  so  employed,  would  have  engaged  in  productive  in- 
dustry, in  agriculture,  manufacture,  or  trade.  If,  under  such 
conditions,  our  product  had  been  greater,  which  I  doubt,  who 
would  have  consumed  it?  Suppose  the  agricultural  product 
had  been  increased,  who  would  have  been  benefited?  Was 
there  any  demand  for  labor  to  make  nails,  or  to  weave  cotton 
and  wool  ?  Was  there  any  want,  not  supplied,  of  book-keepers 
and  clerks?  Would  it  have  assisted  the  poor  to  have  added 
to  the  number  of  those  who  were  competing  in  the  market  for 
work  ?  or  would  the  fiercer  competition  have  blocked  the  way 
to  increased  production  and  better  distribution  ? 

According  to  Mr.  Atkinson,  in  the  cotton  and  woollen  indus- 
try, where  employment  was  certainly  as  steady  as  in  any  other, 
the  average  term  of  employment  was  not  over  ten  months  in 
the  year.*  The  report  of  the  Bureau  of  Labor  Statistics  for  Illi- 
nois for  the  year  1886,  which  gives  the  record  of  the  number  of 
weeks'  work  performed  by  eighty-five  thousand  three  hundred 
and  twenty-nine  mechanics,  railway  employes,  coal-miners, 
workers  in  manufacturing  establishments,  barbers,  tailors, 
bakers,  and  brewers,  all  belonging  to  organized  labor  associa- 
tions, shows  an  average  loss  of  twenty-eight  per  cent,  of  time 
during  the  year.  Bricklayers  and  stone-cutters  average  twenty- 
seven  weeks  of  work ;  brickmakers,  twenty-five  weeks ;  plumb- 
ers, twenty-eight  weeks ;  carpenters,  thirty  weeks ;  hod-carriers, 
thirty-five  weeks;  plasterers,  forty  weeks,  coopers,  metal- 
workers, and  upholsterers,  thirty  weeks ;  tailors,  wood- workers, 
terra-cotta  workers,  and  half  the  iron-moulders,  thirty-five 
weeks  ;  and  seventy-three  per  cent,  of  the  coal-miners,  twenty- 
six  weeks  or  less  for  the  year.  .  In  1885  the  census  of  Massa- 
chusetts shows  that  persons  engaged  in  manufacturing  were 
unemployed  3.9  months  during  the  year  at  their  principal  occu- 
pations. If  we  add  to  this  the  number  of  those  who  may  be 
said  to  have  no  regular  occupation  in  villages  and  towns,  the 
per  cent,  of  idle  labor  will  appear  still  greater. 

*  The  blast-furnaces  ran  on  the  average  but  eight  months,  and  the  steel- 
works but  nine  months  during  the  census  year. 


208  THE  DISTRIBUTION   OF  WEALTH. 

If,  working  but  three-fourths  of  the  time,  we  produce  all  that, 
under  the  present  system  of  distribution,  we  are  able  to  con- 
sume, all  the  market  will  accept,  cannot  the  girls  be  spared  to 
teach  school? 

Extravagance  and  wastefulness  of  expenditure  are  certainly 
to  be  condemned,  since  they  are  always  unnecessary  and  are  in 
themselves,  as  well  as  in  the  demoralizing  effects  of  example, 
detrimental  to  the  public  welfare.  But  it  must  nevertheless  be 
borne  in  mind  that  our  government  expenditures  are  simply 
the  expenditure  of  so  much  labor,  of  which  we  have  an  abun- 
dance left  and  running  to  waste. 

The  question  of  the  reduction  of  the  amount  of  taxes  is  there- 
fore of  little  moment.  They  who  strive  in  that  direction  to 
obtain  relief  from  existing  evils  are  wasting  time.  If  our  gov- 
ernment could  be  run  without  a  dollar  of  expense,  there  would 
be  nothing  gained.  Industry  is  the  life  of  the  nation.  An  in- 
vention that  would  make  labor  unnecessary  would  be  a  curse 
upon  the  people.  The  real  question  is  how  to  distribute  the 
burden  of  taxation  that  it  may  be  lightly  and  cheerfully  borne  ; 
how  to  relieve  those  who  are  overweighted,  and  to  distribute 
the  rewards  of  industry  according  to  merit. 

The  question  is  not  the  amount  of  taxes,  but  the  sources  from 
which  they  shall  be  drawn.  It  is  a  question  of  how  taxes  shall 
be  laid  so  as  not  to  interrupt  the  course  of  industry  and  distri- 
bution.    The  yoke  is  light  enough  when  properly  adjusted. 

It  is  not  a  question  as  to  how  much  shall  be  withdrawn  from 
the  total  product  of  the  nation's  industry  and  distributed  through 
the  channel  of  public  expenditures ;  and  all  the  rattle  and  noise 
about  high  taxes  is  but  the  pow-wow  of  the  Indian  medicine-man, 
who  understands  neither  the  pathology  nor  therapeutics  of  the 
disease. 

Our  public  schools  have  everywhere  suffered  from  the  false 
notion  that  taxes  necessary  to  secure  good  schools  are  a  public 
burden.  Good  schools  cost  nothing  but  labor,  and  generally 
female  labor  at  that,  which  would  be  otherwise  unemployed, 
and,  when  they  are  made  universal,  they  add  no  weight  to  the 
burden  that  oppresses  industry.  It  is  only  where  good  schools 
and  poor  ones,  high  taxes  in  one  community  and  low  taxes  in 
another,  generous  living  and  niggardly  saving  compete  with 


THE  DISTRIBUTION  OF   WEALTH.  209 

each  other  in  a  common  market,  that  taxes  for  purposes  of 
education  are  felt. 

It  is  the  conflict  between  Chinese  habits  and  American  habits. 
The  man  who  keeps  his  children  out  of  school,  in  order  to  ob- 
tain a  larger  share  of  the  common  market  than  his  more  liberal 
and  enlightened  neighbor,  is  a  public  enemy,  and  should  be 
subject  to  the  penalties  of  the  law. 

The  present  product,  equitably  distributed,  and  consumed  with- 
out necessary  waste,  would  be  adequate  to  meet  the  reasonable 
wants  of  the  whole  people ;  and,  if  that  product  were  increased 
by  the  employment  of  one-fourth  of  the  idle  labor  and  machinery, 
it  would  be  abundant  to  supply  the  comforts  and  luxuries 
necessary  to  satisfy  the  demands  of  our  present  civilization. 

The  problem  is  how  to  secure  that  distribution ;  since  a  prompt 
and  equitable  distribution,  conforming  to  the  requirements  of 
social  demands,  would  bring  into  steady  employment  the  labor 
necessary  to  meet  the  demand. 

Of  food  products  there  is  already  an  abundance ;  but  improve- 
ment is  much  needed  in  the  direction  of  more  economic  con- 
sumption and  improved  domestic  cookery.  And,  in  devoting 
his  attention  to  the  latter  branch  of  economic  and  sanitary 
science,  Mr.  Edward  Atkinson  is  rendering  a  public  service 
fruitful  of  practical  results,  and  altogether  worthy  of  his  supe- 
rior talents.  He  should  be  encouraged  to  continue,  only  now 
and  then  laying  aside  apron  and  cap  to  find  needed  recreation 
in  occasional  rambles  through  the  fields  of  statistical  romance. 

With  all  this  burden  of  taxation  upon  us,  we  have  filled  the 
country  with  railroads,  factories,  furnaces,  and  mills  and  dwell- 
ings. Better  dwellings,  it  is  true,  are  needed,  but  the  labor  that 
could  have  supplied  them  has  been  sitting  on  dry-goods  boxes, 
whittling  pine  sticks,  waiting  for  work,  and  all  because  the 
round  of  distribution  has  been  continually  interrupted  by  ob- 
structions interposed  by  the  efforts  of  aggregated  wealth,  in 
continual  struggle  to  maintain  its  margin  of  profit  and  extend 
its  mortgage  upon  the  future  product  of  the  labor  of  the  coun- 
try, and  also  by  the  fierce  conflict  among  the  working-people 
trampling  over  each  other  to  gather  the  coin  that  is  tossed 
among  the  crowd,  where,  since  all  cannot  be  in  the  middle, 
many  are  on  the  outer  edges  picking  up  stray  pieces  that  roll 

14 


210  THE   DISTRIBUTION   OP   WEALTH. 

beyond  the  usual  range.  This  chaotic  mass  of  workers  and 
capitalists  must  be  reduced  to  order  by  some  system  of  limita- 
tions and  restraints  that  will  give  free  play  to  individual  indus- 
try, by  protecting  it  from  the  avarice  of  wealth,  and  thereby, 
at  the  same  time,  secure  it  from  the  mad  rush  of  the  surging 
crowd,  who,  pressed  by  daily  needs,  are  forever  trampling  op- 
portunity under  foot. 

PENSIONS. 

Since  1863  we  have  paid  in  pensions  to  old  soldiere,  their 
widows  and  orphan  children,  a  billion  of  dollar.  We  have  paid 
it,  but  how  ?  First  in  money,  which  was  soon  expended  for 
the  comforts  of  life.  We  have  therefore  paid  it  in  the  products 
of  the  field,  the  workshop,  and  the  factory ;  paid  it  out  of  our 
abundant  harvests,  and  out  of  the  products  of  machinery  run 
by  steam.  We  have  paid  it  with  the  labor  of  farmers,  carpen- 
ters, clerks,  merchants,  factory  employes,  bakers,  barbers,  min- 
isters, and  teachers ;  we  have  paid  it  in  new  houses,  in  corn, 
potatoes,  and  meat,  in  flour  and  bread,  in  clothing,  in  hair-cuts 
and  in  sermons.  We  have  paid  it  chiefly  in  perishable  products 
which  we  might  neither  keep  nor  otherwise  consume,  and  which, 
when  consumed,  are  promptly  replaced  by  like  products,  all  of 
which  we  have  abundant  power  to  create. 

During  the  same  period  we  have  paid  over  two  billion  three 
hundred  million  dollars  interest  on  the  public  debt.  How  have 
we  paid  it  ?  In  the  first  instance  in  money,  as  pensions  were 
paid.  A  certain  portion  of  this  money  was  expended  for  the 
perishable  products  of  labor,  which,  being  gone,  do  not  stand  in 
the  way  of  further  production.  Another  part  was  expended  in 
the  construction  of  business  houses,  factories,  mills,  and  rail- 
roads, which  maintain  themselves  out  of  their  own  profits ;  so 
that  the  demand  of  the  country,  except  as  increased  by  the 
growth  of  population,  has  been  substantially  supplied,  directly 
for  years,  and  indirectly,  considering  the  profits  on  capital,  for- 
ever. The  demand  has  been  supplied,  and  the  common  people 
have  divested  themselves  of  the  opportunity  to  acquire  the  in- 
terest of  ownership  in  the  great  body  of  the  revenue-producing 
wealth  of  the  nation. 

The  farmer  furnishes  wheat  to  the  consumer,  who  eats  it  and 


THE   DISTRIBUTION   OF   WEALTH.  211 

returns  for  more.  When  the  barber  shaves  his  customer  he  docs 
not  close  his  shop,  for  he  knows  that  beard  will  grow  again  and 
bis  customer  will  come  back;  the  bar-tender  knows  that  his 
patron,  who  has  drunk  his  fill,  will  soon  return  as  thirsty  as 
before ;  the  shoemaker  is  comforted  with  the  thought  that  half- 
soles  wear  out ;  and  even  the  minister  may  find  consolation  in 
the  worldly  knowledge  that  souls  once  brought  to  grace  are 
prone  to  backslide  and  return  to  be  saved  again ;  but  when  rail- 
roads are  built,  railroad  building  is  at  an  end,  for  railroads  pay 
their  own  way,  and  the  capitalist  is  never  called  upon  to  expend 
his  gathered  fortune  either  to  repair  or  build  them  anew. 

We  have  paid  the  interest  by  expending  our  heritage  of 
opportunity! 

But  a  large  portion  of  this  enormous  sum  paid  in  interest  has 
not  been  expended  even  in  constructive  labor,  by  capitalists 
themselves,  but  has  been  returned  to  the  people  in  the  form  of 
loans  to  farmers  and  mechanics.  We  have  paid  the  interest  on 
the  public  debt  in  promises  to  pay  more  interest,  in  mortgages 
that  will  never  die  till  strangled  by  the  iron  grasp  of  an  un- 
friendly law.  They  will  remain,  continually  urging  the  people 
into  the  hurry  of  wasteful  endeavor.  They  will  ride  production 
and  distribution  with  whip  and  spur,  till  the  whole  people  are 
joined  in  one  wild  race  for  the  prizes  of  wealth  which  are  re- 
served to  the  swift  and  strong  alone.  It  is  under  such  condi- 
tions that  speculation  thrives,  and  wealth  is  amassed  in  millions, 
and  the  common  people  grow  poor.  We  have  not  paid  the  in- 
terest ;  we  have  but  renewed  the  bond,  and  chained  labor  to  the 
chariots  of  millionaires. 

The  relation  of  the  government  of  the  United  States  to  the 
public  debt  is  that  of  an  intermediary,  an  agent  to  collect  the 
money  from  the  people  and  transmit  it  to  the  bondholder.  The 
people  are  the  debtors,  and,  instead  of  paying  the  interest  on 
the  bonds  in  the  products  of  labor, — ^the  only  real  payment 
there  can  be, — the  people  have  reborrowed  the  money  at  a 
higher  rate  of  interest  than  before. 

He  who  imagines  that  only  the  particular  debtors  whose 
names  are  on  the  notes  are  concerned,  fails  to  consider  the  effect 
which  a  large  amount  of  individual  indebtedness  owing  to  a 
class  of  wealthy  capitalists  constantly  exerts  on  production  and 


212  THE  DISTRIBUTION   OF  WEALTH. 

distribution,  and  the  manner  in  which  vahies  are  necessarily 
affected  through  the  operation  of  such  indebtedness  on  the  dis- 
tribution of  money.  ^The  debtors  represent  only  the  particular 
spots  where  the  leeches  are  applied ;  the  blood  by  which  they 
are  distended  is  withdrawn  from  the  entire  industrial  system. 

When  fortunes  grow  so  large  that  their  gathering  gains  can 
be  no  longer  consumed  in  the  products  of  the  labor  of  the  peo- 
ple of  the  country  from  which  they  are  drawn,  they  block  the 
way  to  general  thrift ;  check  the  growth  of  small  savings  among 
the  people,  by  which  are  gathered  those  small  fortunes  which 
yield  a  competence  to  many  families,  endure  for  a  generation, 
and  are  then  dissolved  and  distributed  among  the  people  of  the 
generation  that  follows  after,  in  such  amounts  as  are  sufficient 
to  give  assistance  and  encouragement  to  the  building  anew  of 
like  fortunes,  thus  gathering  and  dissolving  again,  as  they  serve 
their  purpose,  yielding  opportunity  for  leisure  and  culture  to 
many  families  distributed  among  the  people  at  large  as  centres 
of  moral  force  and  refined  social  influence. 

That  selfish  maxim,  "Look  out  for  number  one,"  cannot 
always  be  successfully  observed,  without  a  considerate  regard 
for  numbers  two,  three,  and  four.  A  people  are  bound  together 
by  common  ties  and  common  interests  often  liable  to  be  over- 
looked in  the  struggle  for  individual  advantage.  A  man  cannot 
live  a  civilized  life  among  Indians,  for  the  simple  reason  that 
the  people  about  him  are  Indians.  He  may  have  the  necessary 
capital  to  start  a  bank,  or  a  merchant-tailoring  establishment, 
or  an  Italian  opera ;  but  a  bank  would  not  flourish,  and  even  an 
Italian  opera  might  fail  of  appreciation.  Individual  welfare 
depends  on  general  thrift ;  and  every  man  has  a  selfish,  if  not  a 
humane,  interest  in  the  welfare  of  his  neighbor,  of  which  he 
cannot  divest  himself. 

It  is  too  late  now  to  mend  the  mistakes  of  years  ago,  errors 
of  policy  now  too  long  past  to  require  special  attention,  and 
which,  for  the  most  part,  were  but  the  natural,  perhaps  unavoid- 
able, results  of  economic  conditions  which  had  grown  up 
through  the  course  of  centuries,  and  for  which  no  set  of  in- 
dividuals and  no  political  party  may  be  held  accountable.  The 
only  purpose,  in  bringing  these  measures  and  their  results  into 
view  at  the  present  time,  is  to  gather  from  experience  a  knowl- 


THE  DISTRIBUTION  OF  WEALTH.  213 

edge  of  the  route  that  must  be  travelled  in  order  to  escape  from 
the  swamp  into  which  we  have  wandered. 

INDIRECT   TAXATION. 

It  has  been  the  experience  of  all  nations  that  taxes  in  the 
form  of  duties  on  imports  are  more  willingly  paid,  and  meet 
with  less  opposition  from  those  who  pay  them,  than  direct 
taxes.  Some  writers  have  regarded  this  as  a  reason  why  this 
mode  of  raising  public  revenues  should  be  discouraged,  placing 
their  objection  on  the  ground  that  taxes  drawn  from  the  people 
in  this  manner  do  not  sufficiently  challenge  their  attention  to 
cause  them  to  properly  guard  their  own  interests,  and  that  this 
mode  of  collecting  taxes  therefore  leads  to  extravagance  in 
expenditure. 

But  there  is  something  more  to  be  said  in  favor  of  indirect 
taxation  than  merely  that  it  does  not  arouse  opposition  among 
the  people.  The  burden  not  only  seems  to  be  lighter ;  it  is  so  in 
fact.  It  is  a  tax  which  is  paid  according  to  consumption,  which 
every  man  regulates  more  or  less,  both  as  to  time  and  amount, 
according  to  his  ability  and  convenience.  It  is  paid  at  no  stated 
time.  Money  is  all  the  while  being  collected  and  returned  to 
the  people.  The  stream  is  constant ;  there  is  no  interruption 
of  trade  or  of  industry.  The  amount  of  trade  determines  the 
amount  of  tax.  The  tax  is  a  part  of  each  day's  expenditure, 
whereas  direct  taxes  are  paid  in  bulk  at  a  certain  season  of  the 
year.  The  people  of  a  whole  State  are  required  to  store  a  re- 
quisite amount  of  money,  from  five  dollars  to  ten  thousand 
dollars  in  amount,  each ;  sellers  become  numerous  and  buyers 
become  few ;  it  becomes  more  difficult  for  each  one  to  raise 
money,  because  his  neighbors  are  all  endeavoring  to  do  the 
same  thing ;  trade  is  interrupted  and  values  are  impaired. 
Sometimes  the  depression  in  values,  particularly  of  farm-stock, 
is  very  marked,  and  the  period  of  depression  may  be  protracted 
for  months.  The  demand  for  money  for  the  payment  of  taxes 
at  a  particular  time  is  so  great  that,  where  the  volume  of  cur- 
rency is  gauged  by  the  average  amount  of  business  in  a  country, 
as  in  the  nature  of  things  it  must  be,  a  disturbance  of  the  course 
of  distribution  necessarily  follows.  Production  is  reduced  in 
corresponding  degree,  and  there  is  a  consequent  waste  of  labor. 


214  THE  DISTRIBUTION   OF  WEALTH. 

It  may  be  said,  also,  that  the  burden  of  a  direct  tax  often 
bears  very  unequally  on  different  members  of  society  accord- 
ingly as  they  happen  to  be  prepared  to  meet  the  stress  of  the 
demand  or  be  compelled  to  make  sacrifice  of  property  in  order 
to  do  so. 

The  fact  must  never  be  overlooked,  that  the  real  burden  of 
taxation  is  not  measured  by  the  amount,  so  much  as  by  the  degree 
of  disturbance  to  the  even  run  of  production  and  distribution.  Its 
weight  depends  upon  how  it  is  adjusted ;  upon  the  direction 
taken  by  the  public  revenues  in  their  distribution  after  they  are 
collected,  and  the  degree  of  promptness  with  which  moneys 
collected  are  returned  to  the  people.  A  surplus  in  the  treasury, 
beyond  that  which  is  required  to  meet  accruing  demands,  is  not, 
under  any  circumstances,  to  be  justified  or  excused.  Values  are 
gauged  according  to  the  volume  of  money  in  use ;  and  a  with- 
drawal of  a  large  amount  of  money  from  the  people  at  any  one 
time,  to  lie  in  the  public  treasury,  forces  a  readjustment  of 
values  corresponding  to  the  amount  of  money  remaining  in  cir- 
culation, and  readjustment  of  values  is  only  another  name  for 
robbery.  It  is  true  that  an  entire  readjustment  of  values  does 
not  at  once  follow.  The  place  of  the  withdrawn  currency  may 
be,  to  some  extent,  supplied  by  au  extension  of  credit,  or  the 
volume  of  trade  may  diminish.  But,  however  the  pressure  may 
be  relieved,  and  whether  or  not  the  consequences  are  made 
manifest  in  clearly-defined  results,  many  people  must  suffer  loss. 

INTERNAL  REVENUE   TAXES. 

The  internal  revenue  taxes  of  the  United  States  for  the  year 
1887  were  as  follows  : 

Spirits $65,829,322 

Fermented  liquors 21,922,187 

Tobacco 30,108,067 

Banks  and  bankers 4,288 

Oleo-margarine  and  dealers 723,948 

Penalties 220,205 

$118,808,017 

The  tax  on  spirits,  fermented  liquors,  and  tobacco  was,  when 
levied,   justified  by  the  necessity  for  a  large  revenue,  these 


THE  DISTRIBUTION  OP  WEALTH.  215 

articles  being  considered  suitable  objects  of  taxation  because  of 
the  large  revenue  they  may  be  made  to  yield  and  the  facility 
with  which  the  tax  may  be  collected.  Since,  however,  the 
necessity  out  of  which  these  taxes  originally  sprung  no  longer 
continues,  the  question  now  arises  as  to  whether  there  remains 
any  good  reason  for  maintaining  them.  If  it  were  true  that 
the  tax  on  spirits  tended  greatly  to  diminish  their  consumption, 
there  would  be  little  question  as  to  the  wisdom  of  continuing 
the  tax.  That  the  large  consumption  of  intoxicating  liquors  is 
a  grave  social  evil  admits  of  no  controversy.  But  it  is  unfortu- 
nately true  that  people  who  use  these  articles  pay  little  heed  to 
the  price ;  and  I  believe  the  opinion  is  generally  entertained  by 
careful  observers  that  the  increased  cost  resulting  from  high 
taxes  tends  in  no  marked  degree  to  diminish  their  use. 

The  taxes  on  liquors  and  tobacco  are  frequently  defended  on 
the  ground  that  these  articles  are  luxuries.  Taxes  are  laid  on 
the  luxuries  rather  than  on  the  necessaries  of  life,  for  the  reason 
alone  that  taxes  on  luxuries  are  supposed  to  fall  upon  the  more 
wealthy  members  of  society  who  are  able  to  pay  them,  rather 
than  on  the  poor  who  are  less  able.  The  distinction  drawn  is 
not  to  be  determined  by  the  definition  of  words ;  it  is  a  practical 
distinction  relating  to  a  clearly-defined  economic  principle. 

Tobacco  is  an  article  of  almost  universal  consumption  ;  and 
the  greater  part  of  the  spirituous  and  malt  liquors  which  are 
consumed  are  drunk  by  working-men,  the  majority  of  whom  can 
ill  afford  the  indulgence ;  and  large  numbers  deprive  themselves 
and  families  of  the  necessaries  of  life  in  order  to  gratify  an 
appetite  which  they  are  unable  to  restrain.  To  impose  upon 
these  people,  and  especially  upon  those  already  impoverished 
through  the  indulgence  of  an  unfortunate  habit,  a  special  tax, 
in  addition  to  the  burdens  which  they  share  equally  with  other 
members  of  society,  is  only  another  exhibition  of  that  spirit  of 
injustice  which  takes  advantage  of  the  weak  because,  having  no 
power  to  resist,  they  become  the  easy  prey  of  those  whose 
interest  it  may  be  to  despoil  them.  And  then  to  justify  the 
robbery  on  the  ground  that  the  tax  is  a  tax  upon  luxuries  is  to 
offend  intelligent  sincerity  with  transparent  pretence. 

In  favor  of  the  license  tax,  it  may  be  said  that  it  is  a  measure 
whereby  the  evil  of  indulgence  in   intoxicating  liquors  is   re- 


216  THE  DISTRIBtmON  OP  WEALTH. 

strained.  But  the  revenue  received  from  this  tax,  instead  of 
being  appropriated  exclusively  to  public  uses  in  general,  should 
be,  in  part  at  least,  converted  into  a  fund  for  the  education  and 
support  of  the  necessitous  and  dependent  poor,  to  whom  in 
equity  it  belongs.  The  money  which  should  be  used  to  purchase 
food  and  clothing  for  women  and  children  is  gathered  into  the 
revenues  of  a  great  city  and  expended  for  public  uses,  thus 
relieving  property  owners  from  burdens  which  they  could  not 
otherwise  escape.  As  ever,  the  weak  and  defenceless  are  the 
prey  of  the  heartless  and  the  strong.  A  part  of  this  fund  might 
be  employed  to  a  good  purpose  in  providing  places  of  respect- 
able resort,  free  from  the  demoralizing  influence  of  vicious 
surroundings,  where  working-men  might  find  opportunities  for 
amusement  and  social  intercourse,  which  they  must  now  seek 
in  drinking-saloons,  for  the  reason  that  they  may  not  be  found 
elsewhere  at  prices  which  they  are  able  to  afford. 

There  is  a  further  objection  to  the  internal  revenue  tax  on 
liquors  because  of  the  fact  that  the  necessary  conditions  imposed 
on  the  manufacture  are  such  as  to  make  a  monopoly  of  the 
trade,  thus  affording  opportunities  for  the  aggregation  of  wealth 
which  should  find  no  favor  in  the  policy  of  the  law. 

INCOME   TAX. 

In  the  United  Kingdom  of  England,  Scotland,  and  Ireland  a 
large  portion  of  the  annual  revenue  is  raised  by  a  tax  on  incomes ; 
the  amount  of  this  tax  in  1881  being  fifty-three  million  two 
hundred  and  fifty  thousand  dollars. 

The  United  States  collected  an  income  tax  from  1863  to  1872 
inclusive.  The  largest  amount  raised  in  any  one  year  was  about 
sixty-one  million  dollars  in  1866,  assessed  on  four  hundred  and 
sixty  thousand  one  hundred  and  seventy  persons.  The  law  was 
a  departure  from  the  methods  with  which  the  people  were 
familiar,  and  met  with  much  opposition.  Its  enforcement  was 
attended  with  difficulties,  which  experience  would  no  doubt,  in 
time,  greatly  modify.  The  chief  objection  to  this  mode  of  taxa- 
tion lies  in  the  inquisitorial  character  of  the  assessment,  which 
requires  disclosures  that  many  people  are  reluctant  to  make. 
But  the  tax  is  an  essentially  just  one,  and,  if  levied  on  incomes 
of  not  less   than  two  thousand   dollars,  much  of  the  friction 


THE  DISTRIBUTION  OF  WEALTH.  217 

occasioned  by  the  operation  of  the  law  would  bo  relieved  without 
a  corposponding  reduction  in  the  amount  of  revenue. 

Taxes  should,  in  the  main,  be  collected  out  of  that  excess  of 
income  over  necessary  expenditures  which  may  be  spared 
without  inconvenience,  and  which,  since  it  generally  represents 
gains  accruing  from  the  advantages  of  superior  skill  in  trade,  or 
profits  on  capital,  is  the  product  of  the  labor  of  other  people, 
may  be  justly  taken  for  the  common  benefit.  The  only  reason- 
able objections  which  may  be  interposed  are  such  as  arise 
out  of  public  policy.  If  the  tax  were  graded  according  to  the 
amount  of  income, — if,  say,  two  per  cent,  were  the  rate  on  the 
amount  over  two  thousand  dollars  and  under  three  thousand 
dollars,  three  per  cent,  on  the  next  thousand,  four  per  cent,  on 
the  next,  and  so  on  until  the  amount  of  the  tax  would  absorb 
the  excess  of  income, — the  law  would  be  most  effective  in  modi- 
fying inequalities  of  distribution  and  equalizing  opportunities 
among  the  people.  Such  a  law  would  impose  no  burden 
upon  industry,  nor  would  it  interfere  with  the  operations  of 
trade.  It  would  meet  with  opposition  from  those  who  would 
be  most  affected  by  it,  but  even  they  would  cease  to  complain 
after  it  had  become  fully  established  as  a  feature  of  the  revenuo 
system  of  the  country. 

DIRECT   PROPERTY  TAXES. 

The  taxes  collected  by  States  and  minor  political  divisions 
are  direct  taxes  laid  almost  wholly  on  property  without  distinc- 
tion as  to  character  or  amount.  However,  in  some  States 
exceptions  are  made  of  amounts  under  a  certain  sum ;  and  since 
assessors  are  accustomed  to  place  very  low  valuations  on  house- 
hold goods,  those  persons  who  own  little  else  enjoy  the  benefit 
of  an  exception  in  practice  not  allowed  in  theory. 

In  a  country  where  the  right  of  suffrage  is  exercised  by  all, 
and  where,  in  theory  at  least,  every  man  possesses  equal  author- 
ity over  the  disposition  of  the  public  revenues,  public  policy 
would  seem  to  require  that  all,  unless  it  should  be  the  exception- 
ally poor,  should  feel  the  touch  of  the  public  burden.  The 
payment  of  taxes  tends  to  enhance  the  interest  of  the  citizen 
in  public  affairs,  while  entire  freedom  from  pecuniary  responsi- 
bility places  in  the  hands  of  the  voter  who  may  be  exempt  a 


218  THE  DISTRIBUTION  OF  WEALTH. 

power  without  the  restraint .  required  to  hold  that  power  in 
check.  • 

Taxes  are  paid  from  the  annual  product  of  labor ;  and  prop- 
erty which  yields  no  revenue  ought  not  to  be  taxed,  if  it  were 
practicable  otherwise  to  rate  taxes  according  to  incomes.  There 
is  no  good  reason  for  taxing  household  goods,  or  a  homestead, 
except  that  the  amount  of  property  of  this  class  may  be  con- 
sidered as  an  index  to  the  amount  of  the  owner's  income,  or  to 
his  ability  to  pay.  But,  since  it  is  impracticable  to  gauge  the 
amount  of  the  earnings  of  individuals,  or  their  ability  to  con- 
tribute to  the  public  revenues,  by  any  more  accurate  system  of 
measurement,  the  method  is  adopted  of  assessing  each  according 
to  his  property,  regardless  of  its  character. 

Church  property  is  not  taxed,  for  the  reason  that  it  neither 
yields  a  revenue  nor  represents  an  income.  Eevenue -bearing 
property  of  churches,  however,  should  not  be  exempt,  unless, 
considered  as  contributing  to  a  worthy  object,  the  State  may 
properly  allow  an  exemption  below  a  reasonable  limit  fixed  by 
constitutional  law.  This  policy,  however,  is  one  which  is  liable 
to  abuse,  since  it  does  not  have  the  support  of  any  clearlj-- 
defined  principle  marking  the  limit  which  may  not  be  passed. 
Churches  may  be  educational  institutions  of  great  public  benefit, 
or  they  may  be  narrow  sectarian  establishments  whose  influence 
is  pernicious.  The  Legislature  cannot  assume  the  function  of 
deciding. 

TAXES   ON  REAL   ESTATE. 

Mr.  Edward  Atkinson  is  of  the  opinion  that  a  tax  on  real 
estate  should  constitute  the  principal  source  of  public  revenue, 
holding  that  such  a  tax  would  so  diffuse  itself  that  the  burden 
of  its  payment  would  be  more  widely  and  equitably  distributed 
than  that  of  any  other  form  of  taxation.  And  if  taxes  are  to 
be  collected  from  a  single  source  only,  a  tax  on  real  estate  would 
come  nearer  filling  all  the  requirements  of  an  equitable  tax  than 
any  other.  But  it  is  not  true  that  the  revenues  raised  by  direct 
taxation,  where  the  amount  is  large,  can  be  confined  wholly 
either  to  real  estate,  or  to  personal  property,  or  to  any  species 
of  property,  without  causing  the  burden  of  taxation  to  press 
very  unequally.  Theories  of  political  economy  are  generally 
framed  on  the  assumption  of  the  complete  mobility  of  capital 


THE  DISTRIBUTION  OP  WEALTH.  219 

and  labor,  and  of  the  prompt  adjustment  of  inequalities  by 
means  of  the  levelling  power  of  competition.  But,  since  the  fact 
is  that  labor  is  most  sluggish  in  its  movements  as  regards 
changes  both  of  occupation  and  locality,  and  the  movements  of 
capital  in  many  departments  of  industry  are  subject  to  natural 
limitations  prescribed  by  the  form  of  investment,  as  well  as 
other  obstructing  causes,  the  theory  fails  to  conform  to  actual 
conditions,  and  is  without  value  as  a  test  of  practical  measures. 

A  tax  levied  upon  real  estate,  occupied  for  the  purposes  of 
trade  or  manufacture,  quickly  diffuses  itself  among  consumers, 
without  hinderance  from  any  strong  counteracting  tendency. 
To  the  amount  of  the  original  cost  of  his  goods,  the  merchant 
adds  cost  of  carriage,  rents,  clerk-hire,  and  a  margin  of  profits ; 
the  total  determines  his  retail  prices,  and  the  consumer  pays  the 
whole.  The  trade  of  every  merchant  is  subject  to  the  same 
conditions.  The  manufacturer  fixes  his  prices  by  the  same  rule. 
When  prices  become  too  high,  consumption  falls  off,  and  the 
reactionary  effect  is  seen  in  a  corresponding  reduction  of  each 
of  the  several  items  of  cost,  subject,  of  course,  to  causes  which 
disturb  the  ratios  of  reduction  as  between  profits,  rents,  wages, 
and  transportation.  Here  the  conditions  approximately  conform 
to  the  facts  assumed  by  the  general  theory. 

But  suppose  the  cost  of  an  agricultural  product  be  increased, 
say,  twenty  per  cent,  by  the  levy  of  high  taxes  or  transportation 
charges,  the  price  of  the  agricultural  product  may  not  be  advanced 
in  the  least.  The  farmer  does  not  say,  rents  are  so  much,  wages 
so  much,  and  taxes  are  so  much,  therefore  this  grain  or  these 
cattle  must  bring  a  certain  price,  and  in  this  manner  determine 
what  the  consumer  shall  pay.  The  purchaser  fixes  the  price 
according  to  the  supply.  When  prices  of  a  particular  agricul- 
tural commodity  are  low  as  compared  with  other  agricultural 
commodities,  the  farmer  produces  less  of  the  particular  com- 
modity, but  more  of  something  else.  When  prices  of  all  com- 
modities are  reduced,  he  only  endeavors  to  produce  more,  in 
order  to  make  up  in  quantity  what  he  loses  in  price.  His 
capital  is  fixed,  his  occupation  is  fixed,  and  he  cannot  relieve 
himself  from  the  pressure  of  taxes  or  of  railway  charges  by 
shifting  the  burden  on  consumers. 

Agricultural  labor  is  to  a  great  extent  unskilled  labor.    While 


220  THE   DISTRIBUTION   OF  WEALTH. 

all  cannot  do  equally  well,  everybody  can  farm,  and  surplus  labor 
tends  to  drift  into  agriculture.  All  the  lands  of  a  country  will 
be  occupied  and  cultivated.  There  is  a  counter-tendency,  it  is 
true,  but  it  is  not  effective  to  j)ut  agriculture  on  a  level  of  ad- 
vantage with  other  industries. 

When  the  agricultural  area  is  all  occupied,  and  the  limit  of 
cultivation  without  material  increase  of  capital  and  skill  shall 
have  been  reached,  and  the  demand  for  agricultural  products 
begins  to  press  against  this  limitation,  then  a  tax  on  real  estate 
will  diffuse  itself  among  consumers,  and  the  higher  the  tax  the 
higher  the  relative  price  of  agricultural  products.  Then  the 
theory  of  Mr.  Atkinson  will  more  nearly  define  the  operation 
of  an  economic  principle. 

Taxes  in  different  States  and  in  different  localities  greatly 
vary;  and  a  tax  on  lands  might,  in  some  sections,  not  only 
destroy  all  the  profits  of  agriculture,  but  also  force  wages  far 
below  the  average  general  standard.  It  would  be  like  a  special 
tax  on  a  single  merchant  in  a  village,  or  on  a  woollen-mill  in  one 
locality.  By,  in  the  first  instance,  through  the  direct  operation 
of  law,  distributing  the  burden  of  taxation  over  all  classes  of 
property,  these  inequalities  are  reduced  to  a  minimum. 

There  is  no  good  reason,  however,  why  taxes  on  real  estate 
should  be  made  absolutely  uniform  in  proportion  to  value.  The 
man  who  owns  and  cultivates  forty  acres  of  land  ought  not  to 
pay  the  same  rate  of  tax  as  the  man  who  owns  five  thousand 
acres,  which  he  rents  to  other  people.  Lands  included  in  one 
individual  ownership  to  the  value  of,  say,  five  thousand  dollar, 
aside  from  dwelling-house,  might  be  taxed  at  the  same  rate ;  but 
on  values  in  excess  of  that  amount  the  rate  should  be  gradually 
advanced  to  the  point  of  making  ownership  unprofitable  after  a 
certain  limit  has  been  reached.  The  operation  of  a  revenue 
measure  of  this  character,  in  preventing  the  aggregation  of  real 
property,  might  be  more  satisfactory  than  that  of  a  law  pre- 
scribing an  absolute  limit  on  the  amount. 

The  homesteads  occupied  and  owned  by  widows  and  minor 
children  and  of  men  above,  say,  sixty  years  of  age,  under  the 
value  of,  say,  one  thousand  dollars,  should  be  exempt  from  tax- 
ation, for  the  reason  that  they  neither  are  revenue-bearing 
property,  nor  do  they,  as  a  class,  measure  the  income  of  the 


THE  DISTRIBUTION  OP  WEALTH.  221 

owners.  This  property,  by  the  conditions  of  its  use  and  owner- 
ship,  may  be  readily  distinguished  and  excepted,  and  there  is  no 
good  reason  why  it  should  bear  any  part  of  the  burden  of  the 
public  revenues. 

TAXATION   OF   CREDITS. 

The  attempt  to  tax  credits  has  everywhere  proven  a  failure. 
Being  intangible,  they  elude  the  assessor,  and  not  one-fifth  of 
the  credits  of  a  State  where  the  attempt  is  made  to  tax  them 
are  ever  listed  for  taxation.  In  the  country  and  in  small  towns 
the  proportion  of  credits  taxed  is  much  greater  than  in  cities. 
There  is  no  uniformity,  and  there  never  can  be.  The  burden 
falls  most  heavily  on  honest  people,  who  pay  a  penalty  for  being 
more  truthful  than  their  fellows. 

In  the  year  1884  the  valuation  of  credits,  other  than  those  of 
banks,  bankers,  etc.,  in  Cook  County,  Illinois,  which  contains  the 
great  and  wealthy  city  of  Chicago,  was  only  $209,476 ;  while  in 
the  county  of  Knox,  with  a  population  in  1880  of  38,344,  the 
same  class  of  credits  were  valued  at  $793,819  ;  in  the  county  of 
La  Salle,  with  a  population  in  1880  of  70,403,  the  valuation  was 
$632,681 ;  in  the  county  of  Winnebago,  with  a  population  in 
1880  of  30,505,  the  valuation  was  $725,218;  in  the  county  of 
McLean,  with  a  population  of  60,100,  the  valuation  was  $591,286. 
In  the  year  1888  the  valuation  of  the  same  class  of  credits  was,  in 
Cook  County,  which  then  had  a  population  of  1,000,000,  $119,990 ; 
in  Knox  County,  $346,541;  in  La  Salle  County,  $532,070;  in  McLean 
County,  $554,184;  in  Winnebago  County,  $636,688 ;  while  in  the 
county  of  Edwards,  with  a  population  not  one-hundredth  part  as 
great  as  that  of  Cook  County  in  1888,  the  valuation  was  $119,200, 
only  seven  hundred  and  ninety  dollars  less  than  that  of  Cook 
County.  Clay  County  had  $28,064,  while  the  much  larger 
county  of  Wayne  adjoining  had  but  $19,248,  and  the  adjoining 
county  of  Effingham,  with  a  greater  population  and  more 
wealth,  had  but  $7813.  In  the  same  year  the  credits  of  banks, 
brokers,  etc.,  of  Cook  County,  are  returned  at  $67,800,  while  the 
same  class  of  credits  in  the  county  of  Clay,  with  a  population 
only  about  one-fiftieth  part  as  great,  are  returned  at  $19,463 ; 
those  of  the  larger  adjoining  counties  of  Wayne,  Effingham, 
and  Marion,  at  $3609,  $315,  and  $12,117  respectively.    There  is, 


222  THE  DISTRIBUTION  OF  WEALTH. 

indeed,  no  approximation  towards  a  true  valuation  of  credits  of 
any  kind. 

The  tax  on  credits,  so  far  as  it  is  effective,  is  a  double  tax.  B 
owns  two  thousand  dollars'  worth  of  property;  A  has  one 
thousand  dollars  in  money.  Here  then  is  three  thousand  dollars* 
worth  of  taxable  property.  But  B  borrows  A's  one  thousand 
dollars,  and  gives  to  A  his  note  for  one  thousand  dollars ;  the 
assessor  lists  the  two  thousand  dollars'  worth  of  property 
which  B  had  at  the  start,  and  also  one  thousand  dollars  more 
in  money  or  other  property  in  which  B  may  have  invested  the 
money  he  borrowed  from  A,  and  also  the  note  for  one  thou- 
sand dollars  given  to  A,  making  a  total  valuation  of  four  thou- 
sand dollars.  By  this  transaction  between  A  and  B  the  amount 
of  the  assessment  has  been  increased  in  the  sum  of  one  thousand 
dollars,  although  the  amount  of  property  remains  the  same. 
Here  is  an  injustice,  the  weight  of  which  must  fall  on  either  one 
or  the  other,  or  on  both  the  parties.  It  in  fact  falls  upon  the 
borrower ;  the  effect  of  taxation  of  credits  is  to  raise  the  rate  of 
interest.  The  money-loaner  generally  escapes  the  tax,  the 
amount  of  which  he  saves  as  compensation  for  risk,  or  wear  and 
tear  of  conscience  in  dodging. 

The  rate  of  taxation  varies  greatly  in  different  localities.  In 
one  village,  or  city,  or  school  district  it  may  be  double  the  rate 
which  is  collected  in  another  district  or  village  near  by.  The 
rate  of  interest  cannot  be  made  to  vary  to  correspond  with 
these  varying  rates  of  taxation.  The  lender  of  money  will 
therefore  either  conceal  his  credits  or  adopt  for  his  residence  a 
locality  where  the  rate  is  low. 

The  borrower  may  reside  in  one  State  and  the  creditor  in 
another,  thus  subjecting  credits  in  the  same  locality  to  different 
rates  of  taxation. 

The  tax  on  money  should  be  retained,  since  such  a  tax,  par- 
ticularly if  credits  are  untaxed,  tends  to  prevent  hoarding. 

Banks  should  not  be  taxed  on  their  circulation  or  their  credits; 
they  should  be  reached  by  .reducing  the  rate  of  interest  they 
may  be  permitted  to  collect. 

The  rate  of  taxation  on  money  should  be  uniform, — every- 
where the  same, — so  as  to  present  no  obstacle  to  its  free  circu- 
lation.   A  tax  on  money  will  always  be  more  or  less  evaded ; 


THE  DISTRIBUTION   OP  WEALTH.  223 

novertholess,  tho  value  of  such  a  tax,  as  a  measure  to  prevent 
hoarding  money  and  thus  withholding  it  from  circulation, 
justifies  the  imposition  of  such  tax,  notwithstanding  the  frequent 
evasions  to  which  it  would  be  subject. 

The  only  reason  that  can  be  urged  for  the  policy  of  taxing 
credits  is  that  such  tax  yields  a  revenue.  It  is,  however,  a 
revenue  unjustly  drawn  from  the  borrower,  who  really  pays  the 
tax  by  way  of  increased  interest. 

Instead  of  persisting  in  the  ineffectual  attempt  to  reach  credits 
through  revenue  laws,  we  should  reach  them  by  means  of  usury 
laws.  Let  B  pay  the  taxes  on  the  tangible  property  which  he 
owns,  and  let  every  other  person  do  likewise;  and,  when  all 
tangible  property  is  taxed,  there  is  no  more  property  to  tax. 
The  sum  of  the  tangible  property  of  a  country  comprises  its 
total  wealth.  When  a  government  taxes  credits  it  enters  into 
partnership  with  the  creditor  to  compel  the  debtor  to  pay  the 
higher  rate  of  interest  necessary  to  satisfy  the  demands  of  both 
the  creditor  and  the  government. 

Continuing  the  foregoing  illustration,  the  property  which  A 
did  have,  one  thousand  dollars  in  money,  having  been  trans- 
ferred to  B,  in  order  to  equitably  apportion  the  burden  of  tax, 
B  should  have  the  benefit  of  a  reduction  in  the  rate  of  interest, 
which  is  now  fixed  on  the  assumption  that  A  will  be  required 
to  pay  taxes  on  B's  note.  Under  the  present  policy,  A  gets 
the  interest,  but,  by  evading  the  law,  escapes  the  taxes.  The 
tax  on  tangible  property  cannot  be  evaded;  therefore  let  the 
tangible  property,  which  is  all  the  property  owned  by  both  A 
and  B,  be  taxed ;  but  allow  B  to  withhold  a  part  of  the  interest 
which  he  now  pays,  in  order  to  make  sure  that  A  does  not 
escape  from  his  just  obligations. 

The  present  system  is  wholly  in  favor  of  the  capitalist,  and 
against  the  borrower  and  against  the  working-people.  If 
Hodge  be  not  too  dull,  he  will  change  his  tactics,  and  catch 
the  coon  at  the  other  end  of  the  log. 

In  1881  the  Legislature  of  the  State  of  Massachusetts  passed 
an  act  exempting  mortgages  on  real  estate  from  taxation.  The 
effect  was  an  immediate  decline  in  the  rate  of  interest  on  mort- 
gage loans  of  nearly  one-half  of  one  per  cent.,  and  the  decline 
which  measures  the  full  effect  of  the  law  amounts  to  about  one 


224  THE  DISTRIBUTION   OF   WEALTH. 

per  cent,  in  the  rate  of  interest  on  mortgage  loans.  There 
followed  the  enactment  of  this  law  a  remarkable  increase  in 
building  operations  in  Boston.  The  new  buildings  and  altera- 
tions in  1881  amounted  to  $3,144,260,  in  1882  to  $8,918,969,  and 
in  1889  they  had  increased  to  $17,120,779.  The  total  value  of 
real  estate  improvements  in  the  period  from  1882  to  1889  was 
$77,855,884  more  than  if  the  average  of  the  two  years  preced- 
ing the  passage  of  this  act  had  been  maintained.*  That  this 
increase  in  building  is  wholly  attributable  to  the  reduction  in 
the  rate  of  interest  consequent  on  the  enactment  of  the  law 
exempting  mortgages  from  taxation  may  not  be  claimed ;  but 
the  reduction  in  the  rate  of  interest  was  no  doubt  a  principal 
factor  in  producing  the  result  shown. 

The  distinction  made  in  the  legislation  of  Massachusetts 
between  mortgage  loans  and  other  credits  is  wholly  arbitrary 
and  not  marked  by  distinction  in  principle. 

Taxes  represent  a  certain  portion  of  the  annual  product  which 
is  diverted  to  a  designated  use.  The  working-people,  who 
create  this  product,  pay  the  taxes.  Those  whose  names  appear 
upon  the  tax-list  are  the  persons  through  whom  the  taxes  are 
paid.  The  amount  which  they  in  fact  pay  is  measured  by  the 
amount  of  their  contribution  to  the  total  product  and  the  rate 
of  tax  to  which  property  is  subject. 

The  manner  in  which  taxes  are  levied  has  much  to  do  with 
the  distribution  of  products,  and  the  diversion  of  wealth  and  the 
prosperity  of  particular  industries  depends  in  great  measure  on 
the  revenue  policy  of  a  country. 

The  working-people,  and  particularly  the  poorer  classes,  who 
are  erroneously  supposed  to  pay  but  little  tax,  have  a  vital 
interest  in  the  question  as  to  how  public  revenues  shall  be 
raised.  Ee venue  systems  should  be  judged  by  their  effects  upon 
the  distribution  of  wealth,  as  well  as  by  their  effectiveness  in 
accomplishing  those  ends  which  are  supposed  to  lie  within  the 
scope  of  the  direct  purpose  which  they  are  intended  to  serve. 

By  means  of  properly-adjusted  revenue  laws,  supplemented 
by  the  necessary  limitations  on  rates  of  interest,  it  is  practi- 
cable to  prevent  those  gross  aggregations  of  wealth  which  have 

*  See  Q^rt&rly  Journal  of  Economics,  April,  1890. 


THE  DISTRIBUTION  OF  WEALTH.  225 

grown  up  under  existing  policies.  In  many  States  constitu- 
tional amendments  would  be  required,  in  order  to  admit  of  the 
introduction  of  the  necessary  revenue  reforms.  But  present 
conditions  will  not  be  remedied  without  some  radical  departures 
from  the  course  of  legislation  hitherto  pursued. 


CHAPTEE  YIIl. 

INTERNATIONAL   TRADE — PROTECTION. 

In  all  ages  and  in  all  stages  of  civilization  the  habit  of  ex 
changing  the  product  of  one  form  of  labor  for  the  products  of 
other  forms  of  labor  has  existed.  To  the  North  American  In 
dian,  the  African  barbarian,  and  the  wild  Australian,  trade  is  as 
habitual  as  with  the  civilized  European.  But  to  a  civilized 
people,  among  whom  there  exists  the  utmost  subdivision  of 
labor,  so  that  one  individual  consumes  only  a  small  part  of  the 
product  of  his  own  labor,  and  every  person  consumes  a  resultant 
product  of  the  labor  of  many  persons,  exchange  becomes  an 
absolute  necessity.  Merchants,  wholesale  and  retail,  agents, 
factors,  and  traders  of  all  classes  become  necessary  in  the  busi- 
ness of  distribution.  The  value  of  the  services  which  they 
render  to  society  is  added  to  the  price  of  the  product  which 
passes  through  their  hands,  and  their  wages  are  paid  by  the 
consumer.  It  becomes  the  interest  of  this  class  to  promote  ex- 
change, even  beyond  the  demands  of  society.  The  greater  the 
volume  of  trade,  the  greater  the  quantity  and  value  of  the 
products  exchanged,  the  larger  their  profits. 

The  service  performed  by  this  class  requires  a  high  degree  of 
intelligence  and  skill.  They  constitute,  therefore,  one  of  the 
most  influential  classes  of  society,  not  only  because  of  superior 
intelligence,  but  because,  also,  of  acquired  wealth.  Their  in- 
terests are  always  well  guarded ;  their  influence  upon  legislation 
is  prompt,  persuasive,  and  effective.  The  earliest  writings  upon 
the  subject  of  political  economy  relate  to  commerce.  How  to 
promote  commerce  is  a  question  that  never  retires  from  the 
arena  of  debate,  nor  withdraws  from  the  chamber  of  legislative 

15 


226  THE  DISTRIBUTION   OP  WEALTH. 

council.  The  highest  moral  considerations  yield  it  precedence; 
and  violated  law  and  outraged  humanity  await  their  turn  in 
patience  and  in  silence.  When  trade  makes  its  demands,  it  is 
not  with  the  hesitating  words  of  modest  diffidence,  nor  in  the 
subdued  tones  of  unpractised  timidity,  but  with  the  loud  assur- 
ance of  accustomed  command.  And  the  popular  mind  appears 
to  be  thoroughly  imbued  with  the  idea  that  national  prosperity 
is  gauged  by  the  volume  and  extent  of  commerce,  and  that 
whatever  is  done  that  promotes  trade,  promotes  national  pros- 
perity. To  such  an  extent  has  this  idea  been  cultivated,  that 
boards  of  trade,  whose  principal  business  it  is  to  speculate  in 
future  values,  and  conduct  a  seeming  trade  without  any  accom- 
panying exchange  of  products,  are  rated  as  men  of  business, 
and  rank,  in  general  esteem,  as  promoters  of  public  interests. 

In  the  popular  mind  there  seems  to  be  a  tendency  to  overlook 
the  fact  that  the  usefulness  of  trade  has  its  limitations  in  the 
needs  of  the  consumer  and  not  in  the  needs  of  the  merchant  who 
conducts  the  business  of  exchange  ;  that  it  is  possible  to  promote 
and  carry  on  a  commerce  that  serves  no  good  purpose,  except  to 
yield  revenue  to  merchants  and  traders  and  transportation  com- 
panies ;  that  a  demand  for  products  may  be  cultivated  in  the  in- 
terests of  those  alone  who  derive  a  profit  from  buying  and  selling. 

America  is  a  great  country,  with  a  variety  of  people,  and 
possessing  a  capacious  and  hungry  market  that,  with  ostrich- 
like avidity,  seizes  every  shining  bauble  that  falls  within  its 
range.  We  are  a  people  of  generous  consumers,  with  liberal 
purses.  When  John  Bull  rings  the  door-bell  and  calls  for  the 
lady  of  the  'ouse,  he  receives  a  civil  answer;  and  when  he  opens 
his  pack  and  displays  his  wares,  "  missus"  is  sure  to  find  some- 
thing she  wants, — and  so  cheap.  There  is  no  doubt  but  that  if 
the  products  of  foreign  nations  had  free  entrance  to  our  markets, 
we  should  buy  freely  some  things  which  we  can  do  equally  well 
without,  and  many  more  that  we  can  more  cheaply  produce  at 
home.  We  would  ship  back  agricultural  and  manufactured 
products  in  payment ;  trade  would  be  promoted ;  traders,  mer- 
chants, and  transportation  companies  would  make  good  profits ; 
but  would  the  American  people,  as  a  whole,  be  benefited  or 
injured  thereby?     This  is  the  question  involved  in  the  issue. 

There  always  is  an  appearance  of  prosperity  attending  the 


THE  DISTRIBUTION  OF   WEALTH.  227 

interchange  of  commercial  products,  and  it  is  clear  that  the 
merchants  who  handle  foreign  trade  in  those  cities  which  are  its 
chief  avenues  enjoy  opportunities  for  increased  profits,  which 
they  do  not  neglect  to  improve ;  but  what  are  the  advantiages, 
or  disadvantages,  to  the  people  at  large  ?  Does  the  prosperity 
of  the  artisan,  the  mechanic,  the  farmer,  and  common  laborer 
depend  upon  crowded  docks,  or  may  it  be  estimated  by  a  count 
of  masts  in  the  harbor? 

"  To  a  country  of  small  area,  or  a  country  of  limited  natural 
resources, — to  a  country  like  England  or  France,  whose  food- 
products  are  not  adequate  to  the  wants  of  the  people, — foreign 
trade  is  essential.  Trade  between  nations  rests  upon  the  same 
necessity  as  trade  between  individuals.  If  A  has  that  which 
he  does  not  require  for  his  own  use,  but  which  B  needs  for  his 
use,  and  B  has  that  which  he  does  not  require  for  his  own  use, 
but  which  A  does  need,  an  exchange  may  be  made  which  will 
be  profitable  to  both.  If  A  be  a  farmer,  and  B  a  blacksmith, 
it  is  more  profitable  to  both  that  A  should  raise  wheat  for  B, 
and  that  B  should  shoe  horses  for  A,  than  that  both  should 
attempt  to  perform  labor  for  which  they  are  unfitted,  and  sup- 
ply their  own  wants  without  exchange  of  the  products  of  their 
labor.  But  if,  instead  of  A,  we  suppose  a  community  of  one 
hundred  farmers,  having  interests  and  property  in  common,  and 
contributing  their  labor  to  a  common  fund,  and  the  labor  of  one 
blacksmith  yields  an  annual  product  one-third  greater  in  value 
than  the  labor  of  one  farmer,  then  it  would  be  to  the  interest 
of  this  community,  instead  of  employing  a  smith  outside  of  its 
own  members,  that  one  of  themselves  should  learn  the  trade  of 
blacksmith  and  thereby  save  the  equivalent  of  one-third  of  the 
labor  of  one  man.  If  England  has  that  which  the  people  of 
the  United  States  need,  and  the  United  States  have  that  which 
the  people  of  England  require,  beyond  the  demands  of  home 
consumption,  then  there  may  be  profitable  trade  between  the 
two  countries.  If  there  are  two  articles,  one  of  which  may  be 
produced  at  less  labor-cost  in  England,  and  the  other  may  be 
produced  at  less  labor-cost  in  the  United  States,  then  a  mutual 
exchange  may  be  profitable  to  both.  But  if  the  reason  of  the 
higher  cost  in  one  country  be  because  of  the  want  of  skilled 
labor,  or  the  natural  inertia  of  unskilled  labor  and  its  disposition 


228  THE  DISTRIBUTION  OF  WEALTH. 

to  adhere  to  its  accustomed  pursuits,  then  it  may  be  to  the  in- 
terest of  that  country  to  develop  its  unskilled  into  skilled  labor, 
and  save  to  itself  the  extra  labor-cost  required  for  the  purchase 
of  the  product  of  skilled,  with  the  product  of  unskilled,  labor. 
The  rule,  that  every  nation  should  buy  in  the  cheapest,  and  sell 
in  the  dearest,  market,  is  subject  to  the  more  important  rule  of 
political  economy,  that  it  is  the  first  duty  of  every  nation  to 
cultivate  the  highest  capabilities  of  its  own  labor. 

The  reason  why  we  should  buy  our  coffee  from  Brazil  and  our 
tea  from  China  is  sufficiently  apparent.  We  are  able  to  produce 
neither  at  home,  without  the  most  unprofitable  expenditure  of 
labor.  We  buy  silks  from  France  and  ivory  from  Africa  for  the 
same  reason.  By  so  doing  we  may  procure  silk  at  one-half  the 
labor-cost  that  would  be  required  to  produce  silk  in  the  United 
States.  But  why  should  we  buy  coal  and  iron  in  England? 
The  coal-merchant  in  a  city  on  the  coast  of  Maine  or  Massachu- 
setts may  be  able  to  purchase  a  supply  of  coal  for  less  money 
than  he  could  procure  it  from  Pennsylvania.  (We  import  nine 
hundred  thousand  tons  annually.)  We  import  annually  over 
fifty  million  dollars'  worth  of  the  products  of  iron  and  steel 
This  is  nearly  all  brought  from  England.  The  trader  who  imports 
it  pays  for  it  with  gold  and  silver, — so  much  money.  The  price 
is  less  than  he  would  pay  at  home.  The  traders  who  buy  this 
coal  and  iron  do  not  ask,  "  What  will  you  buy  in  return  ?"  they 
do  not  stop  to  inquire  in  what  way  the  balance  of  trade  will  be 
preserved.  Their  interest  begins  and  ends  with  their  own  trans- 
action. When  the  farmer  purchases  one  hundred  dollars'  worth 
of  dry  goods,  he  pays  one  hundred  dollars  in  money ;  but  he 
must  sell  to  some  one  one  hundred  dollars'  worth  of  agricultural 
product  to  cover  that  purchase  of  dry  goods.  He  may  not  sell 
to  the  same  merchant,  nor  in  the  same  village ;  but  he  must  sell 
somewhere  and  to  some  person,  and  preserve  his  "  balance  of 
trade." 

In  the  year  1887  the  people  of  the  United  States  purchased 
in  Brazil  commodities  amounting  to  $52,953,176,  but  sold  in  that 
country  products  to  the  amount  of  only  $8,127,883.  But  dur- 
ing the  same  period  the  exports  to  Great  Britain  amounted  to 
$366,310,679,  while  the  imports  from  Great  Britain  amounted  to 
only  $165,067,443.   This  account  balanced  would  show  the  people 


THE  DISTRIBUTION  OF  WEALTH.  229 

of  Great  Britain  in  debt  to  the  people  of  the  United  States  in  the 
sum  of  $201,243,236.  But  the  exports  of  Great  Britain  are  in 
excess  of  its  imports  in  its  trade  with  Brazil,  Germany,  Italy, 
Holland,  Central  America,  Mexico,  and  other  countries.  In  the 
trade  between  two  countries  exports  and  imports  may  diifer 
widely  in  amount,  as  in  the  case  of  the  United  States  and 
Brazil ;  but  the  excess  of  imports  from  one  country  is  balanced 
by  an  excess  of  exports  to  another  country.  The  United  States 
buys  coffee  in  Brazil ;  sells  wheat  and  flour  to  England,  which 
ships  iron  and  steel  and  cotton  and  woollen  fabrics  to  Brazil. 
The  entire  trade  may  be  conducted  without  shipment  of  any 
very  large  sums  of  money,  by  means  of  bills  of  exchange. 

The  statistics  of  British  trade  show  that  her  annual  imports 
are  greatly  in  excess  of  her  exports.  During  the  twenty  years 
ending  December,  1880,  there  was  imported  into  Great  Britain, 
in  excess  of  exports,  $7,540,000,000  worth  of  products,  of  which 
$4,680,000,000  worth  was  imported  during  the  decade  ending 
December,  1880,  which  is  equivalent  to  $468,000,000  per  year. 
We  must  not  infer  from  this  showing  that  the  people  of  Great 
Britain  incurred  debt  for  the  amount  of  this  excess  of  imports, 
nor  that  they  sent  abroad  $7,540,000,000  in  gold  and  silver  to 
pay  the  account.  This  excess  of  imports  means  that  British 
capital  is  invested  abroad  in  large  amounts,  and  that  it  yields 
an  annual  revenue  of  $468,000,000.  The  yield  of  British  foreign 
invested  capital  in  the  form  of  dividends  or  interest  in  1883  was 
as  follows : 

Colonial  loans $37,000,000 

Indian      "         31,000,000 

Indian  and  colonial  railways 46,500,000 

Foreign  loans  and  railways 128,500,000 

Total $243,000,000 

To  the  above  should  be  added  moneys  loaned  on  mortgage  in 
Australia,  Brazil,  and  other  countries,  and  much  capital  other- 
wise invested. 

The  exports  and  imports  of  American  commerce  at  the  pres- 
ent time  are  nearly  equal  in  amount,  the  excess  of  exports  in 
1887  amounting  to  about  twenty-four  million  dollars.  There 
has  been  an  annual  excess  of  exports  over  imports  since  1873, 


230  THE  DISTEIBUTION   OF   WEALTH. 

except  the  year  1875.  From  1850  to  1873,  inclusive,  imports 
exceeded  exports,  the  balance  against  the  United  States  being 
met  by  the  export  of  bullion.  The  excess  of  exports  during  the 
last  twenty  years  is  explained  by  the  fact  that  large  amounts 
of  American  bonds  are  held  in  Europe,  and  we  have  been  pay- 
ing interest  with  wheat,  corn,  and  meat. 

Some  product  of  American  labor  must  be  sold  abroad  to  pay 
for  the  coal  and  the  iron  which  we  import.  "What  shall  it  be, — 
our  principal  export,  bread-stuffe  ?  of  which  in  1887  we  exported 
one  hundred  and  sixty-six  million  dollars'  worth.  In  1887 
we  exported  one  hundred  and  two  million  bushels  of  wheat 
at  a  fraction  less  than  ninety  cents  per  bushel  at  the  port  of 
shipment.  Saying  nothing  about  railway  freights,  it  required 
sixty  million  bushels  of  wheat  delivered  at  seaboard  to  pay  for 
that  iron  and  coal,  without  including  the  cost  of  transportation. 
The  production  of  this  sixty  million  bushels  of  wheat,  estimated 
on  the  basis  of  the  cost  of  agricultural  products  in  this  country 
as  shown  by  the  census  of  1880,  represents  a  year's  work  of  one 
hundred  and  ninety  thousand  laborers ;  and,  according  to  the 
same  census  the  products  of  iron  and  steel,  which  were  im- 
ported to  the  amount  in  value  of  fifty-four  million  dollars  Eng- 
lish prices,  or  eighty  million  dollars  American  prices,  required  the 
labor  of  less  than  one  hundred  and  fifteen  thousand  laborers. 
In  the  round  of  exchange  we  have  traded  the  labor  of  five  men 
for  the  labor  of  three  men;  and  yet  we  have  bought  in  the 
cheapest  market  and  sold  in  the  dearest.  The  same  relation 
exists  between  the  labor-cost  of  the  products  of  agricultural 
labor  and  the  products  of  skilled  labor  and  machinery  in  other 
manufacturing  and  mechanical  industries. 

The  same  year  we  imported  $7,300,000  worth  of  glass  and 
glassware,  which  at  American  prices  amounted  to  $10,950,000. 
This  product  represents  the  labor  of  twenty  thousand  four 
hundred  persons,  of  whom  one-third  were  women  and  children. 
It  may  be  said,  therefore,  to  represent  the  labor  of  about  seven- 
teen thousand  men.  We  paid  for  it  in  agricultural  products 
with  the  labor  of  twenty-four  thousand  three  hundred  men,  and 
paid  transportation  charges  on  agricultural  products  besides. 
We  imported  $44,000,000  worth  of  manufactured  woollen  goods, 
of  which  sum  $17,000,000  was  the  product  of  labor  in  manu- 


THE  DISTRIBUTION  OF  WEALTH.  231 

facturing,  allowing  $27,000,000  to  the  credit  of  materials.  A 
product  of  $17,000,000  in  the  woollen  goods  industry  at  Eng- 
lish prices,  or  $28,390,000  at  American  prices,  represents  the 
labor  of  forty  thousand  four  hundred  and  fifteen  persons,  of 
whom  one-eighth  are  children  under  fifteen  years  of  age,  and 
over  one-third  are  women, — more  than  three-sevenths  are  women 
and  children.  We  may  say  this  product  represents  the  equiva- 
lent of  the  labor  of  thirty-two  thousand  men.  To  pay  this  seven- 
teen million  dollars  in  agricultural  product  required  the  labor 
of  more  than  fifty-six  thousand  men,  and  we  paid  the  cost  of 
transporting  agricultural  product  to  seaboard  besides.  To  the 
extent  that  we  pay  in  manufactured  products,  the  foregoing 
deductions  do  not  apply.  But  our  imports  of  manufactured 
products  are  nearly  all  paid  for  in  the  products  of  agriculture.* 

In  arriving  at  the  results  here  given,  I  have  not  taken  into 
consideration  the  capital  employed  in  the  production  of  man- 
ufactured products,  nor  the  capital  employed  in  agriculture, 
which  is  relatively  much  larger  than  that  employed  in  man- 
ufacturing, for  the  respective  products  contrasted.  Nor  have  I 
considered  the  wear  and  waste  of  machinery,  buildings,  etc.,  in 
either  industry.  There  is  probably  no  great  difference,  com- 
paring the  two  branches  of  industry,  in  proportion  to  value  of 
product.  I  have  estimated  the  agricultural  product  at  three 
hundred  dollars  per  year  for  each  full  hand.  The  basis  of  this 
estimate  will  be  found  in  the  chapter  giving  statistics  of  pro- 
ductions of  agriculture.  The  figures  may  be  varied  somewhat 
by  the  actual  facts,  could  they  be  ascertained  more  accurately  j 
but  the  relations  of  the  industries  are  substantially  as  shown. 

Had  the  rate  of  duty  been  low  our  imports  would  have  been 
greatly  increased,  making  it  necessary  to  export  a  correspondingly 
increased  amount  of  agricultural  product.  And,  since  the  price 
falls  as  the  supply  increases,  the  price  received  for  the  exported 

*  In  the  manufacturing  industries  the  average  annual  product  in  1880  was 
seven  hundred  and  twenty-one  dollars  and  ninety-three  cents  per  worker, 
while  in  agriculture  it  was  two  hundred  and  eighty-eight  dollars  and  forty- 
five  cents  per  worker,  the  product  per  worker  being  two  and  one-half  times 
as  great  in  the  former  as  in  the  latter.  If  we  pursue  the  policy  of  purchasing 
manufactured  goods  abroad  it  will  at  once  appear  at  what  expense  of  labor 
we  must  do  so. 


232  THE  DISTKIBUTION   OF  WEALTH. 

product  would  have  been  still  lower,  and  the  cost  of  imports, 
measured  in  labor,  would  have  been  relatively  higher,  thus 
increasing  the  ratio,  already  great. 

The  question,  then,  that  confronts  us  is,  Shall  we  continue  to 
use  the  products  of  foreign  manufacture,  and  pay  for  them 
with  the  products  of  agriculture,  or  shall  we  do  our  own  manu- 
facturing? Shall  we  plough  corn  and  hoe  potatoes  two  days, 
or  work  one  day  in  the  mill,  the  factory,  or  the  mine  ? 

So  long  as  we  continue  our  foreign  importations,  the  diversion 
of  labor  from  agriculture  to  manufacturing  industries,  the  con- 
version of  common  into  skilled  labor,  will  proceed  but  slowly. 
The  agriculturist  will  struggle  on,  year  by  year,  endeavoring  to 
increase  his  income  by  raising  more  wheat  and  corn  and  cattle, 
and  continue  to  defeat  his  aim  by  overweighting  an  already 
overburdened  market.  He  may  attempt  to  reduce  the  price  of 
manufactured  articles  by  unlocking  our  ports  to  foreign  trade ; 
but  it  has  always  been  true,  and  will  remain  true,  that  skilled 
labor  employed  in  manufacturing  industries  will  command 
higher  prices  than  the  unskilled  labor  that  finds  employment  in 
the  field  of  agriculture;  money  will  flow  to  manufacturing 
centres,  and  go  out  again  in  the  form  of  investments  in  stocks 
and  mortgage-loans,  drawing  interest  at  a  rate  that  absorbs  the 
savings  of  the  people. 

The  remedy  must  be  found  in  the  conversion  of  unskilled 
into  skilled  labor,  a  low  rate  of  interest  on  capital,  and  other 
measures  of  a  kindred  character,  suggested  in  other  chapters. 
Wages  may  be  thereby  forced  nearer  to  a  common  level,  while 
the  general  average  of  wages  will  be  raised,  and  the  power  of 
capital  diminished.  What  is  required  is  a  tariff  that  will  pre- 
serve to  our  own  people  the  American  market  for  those  articles 
of  manufacture  or  of  agriculture  which  may  be  produced  at 
home,  at  a  labor-cost  not  greater  than  that  which  is  required  to 
effect  their  purchase  by  means  of  the  exchange  of  the  products 
of  unskilled  labor.  I  am  able  to  perceive  no  other  means  by 
which  this  most  desirable  result  may  be  accomplished.  The 
history  of  the  relations  between  the  industries,  and  between 
capital  and  labor,  in  all  nations,  goes  to  show  that  leaving 
industries  free  and  untrammelled  does  not  accomplish  it. 

'If  we  seek — as  we  must,  if  we  find  a  remedy  for  existing 


THE  DISTRIBUTION  OP  WEALTH.  233 

evils — to  establish  a  national  policy  which  will,  in  a  measure, 
control  the  distribution  of  labor  in  the  interest  of  a  more  equita- 
ble distribution  of  its  rewards,  we  must  dissever  ourselves  from 
the  influence  of  economic  conditions  which  direct  the  industries 
of  foreign  nations,  whose  policy  is  shaped  by  no  such  aims, 
where  no  such  purpose  is  entertained,  and  where  old-established 
conditions,  indurated  customs,  and  long-stifled  aspirations  ob- 
struct the  way  to  industrial  reform. 

Mill,  in  his  "  Political  Economy"  (vol.  ii.  page  532),  says, — 

"It  was  shown,  however,  in  our  analysis  of  the  effects  of 
international  trade,  as  it  has  been  often  shown  by  former  writers, 
that  the  importation  of  foreign  commodities,  in  the  common 
course  of  traffic,  never  takes  place,  except  when  it  is,  economi- 
cally speaking,  a  national  good,  by  causing  the  same  amount 
of  commodities  to  be  obtained  at  a  smaller  cost  of  labor  and 
capital  to  the  country.  To  prohibit,  therefore,  this  importation, 
or  impose  duties  which  prevent  it,  is  to  render  the  labor  and 
capital  of  the  country  less  efficient  in  production  than  they 
would  otherwise  be,  and  compel  a  waste  of  the  difference 
between  the  labor  and  capital  necessary  for  the  home  produc- 
tion of  the  commodity  and  that  which  is  required  for  producing 
the  things  with  which  it  can  be  purchased  from  abroad. 

"  The  amount  of  national  loss  thus  occasioned  is  measured  by 
the  excess  of  the  price  at  which  the  commodity  is  produced, 
over  that  at  which  it  could  be  imported.  In  the  case  of  manu- 
factured goods,  the  whole  difference  between  the  two  prices  is 
absorbed  in  indemnifying  the  producer  for  waste  of  labor  or  of 
the  capital  which  supports  that  labor.  Those  who  are  supposed 
to  be  benefited — namely,  the  makers  of  the  protected  articles 
(unless  they  form  an  exclusive  company,  and  have  a  monopoly 
against  their  own  countrymen  as  well  as  foreigners) — do  not 
obtain  higher  profits  than  other  people.  All  is  their  loss  to 
the  country  as  well  as  to  the  consumer." 

The  foregoing  is  a  statement,  in  general  terms,  of  what  is 
known  as  the  doctrine  of  free  trade,  as  held  by  writers  of  that 
school  of  political  economists.  It  is  not  unusual  for  advocates 
of  this  theory  to  preface  their  remarks  with  some  such  language 
as  that  employed  by  Mill,  "as  it  has  been  often  shown  by 
former  writers."    Had  Mill  been  able,  by  a  satisfactory  analysis 


234  THE  DISTRIBUTION  OP  WEALTH. 

of  the  principles  of  international  trade  and  the  laws  of  produc- 
tion, to  show  the  truth  of  the  doctrine  which  he  embodies  in 
such  broad  generalizations,  he  doubtless  would  have  done  so, 
instead  of  tendering  the  conventional  excuse  which  is  here 
offered  in  lieu  of  a  clear  analysis  of  principles.  Mill's  reference 
to  his  analysis  of  the  effects  of  international  trade  does  not  assist 
us.  He  does  show,  as  he  claims,  that  in  one  sense  the  importa- 
tion of  foreign  commodities  does  not  take  place,  except  when 
such  commodities  may  be  obtained  at  a  smaller  cost  of  labor 
and  of  capital  than  that  for  which  they  may  be  produced  by  the 
country  importing.  But  in  what  sense,  and  according  to  what 
measure  of  cost  ?  The  answer  is.  When  capital  is  measured  by 
prevailing  rates  of  interest,  and  the  value  of  labor  is  measured 
by  the  money  standard  of  wages  of  the  class  of  laborers  employed 
in  the  production  of  the  commodities  imported.  For  instance, 
suppose  the  United  States  to  be  an  agricultural  country,  and 
England  to  be  a  manufacturing  country ;  the  wages  of  persons 
engaged  in  agriculture  in  the  United  States  to  be  one  dollar  per 
day,  and  the  wages  of  persons  engaged  in  manufacture  in  Eng- 
land one  dollar  and  fifty  cents  per  day ;  the  interest  value  of  capi- 
tal  in  the  United  States  to  be  six  per  cent.,  and  the  interest  value 
of  capital  in  England  to  be  four  per  cent. ;  the  wages  of  persons 
engaged  in  manufacturing  in  the  United  States  to  be  two  dollars 
per  day.  Fix  the  number  of  working-days  at  three  hundred 
per  year.  We  will  take  a  manufactured  product  that  consumes 
the  labor  of  one  hundred  men  working  one  year,  and  requires 
one  hundred  thousand  dollars  capital.  The  cost  and  value  of 
the  product  (omitting  materials)  in  England  will  be  as  follows : 

Labor  of  100  men  one  year,  at  $1.50  per  day  each  .    .  $45,000 

Interest  on  $100,000  one  year,  at  four  per  cent.  .    .    .  4,000 

Waste  of  capital  (to  replace  machinery,  etc.)  ....  4,000 

Total  value  of  product  of  labor  and  capital   .  $53,000 

The  cost  of  the  same  product  jnanufactured  in  the  United 
States  will  be  as  follows : 

Wages  of  100  men,  at  $2.00  per  day,  for  one  year  .   .      $60,000 

Interest  on  $100,000  capital,  at  six  per  cent 6,000 

Wear  and  waste  of  buildings,  machinery,  etc.    .   .   .  6,000 

Value  of  product $72,000 


THE  DISTRIBUTION  OF  WEALTH.  235 

Here  exist  the  conditions  which,  according  to  Mill,  render  the 
importation  of  the  English  product  of  manufacture  into  the 
United  States  profitable  to  both  countries.  A  higher  rate  of 
interest  and  a  higher  rate  of  wages  in  manufacturing  industry 
has  increased  the  cost  (measured  in  money,  but  not  the  cost  as 
measured  by  amount  of  labor  expended)  of  the  American  over 
the  English  product. 

Let  us  carry  the  doctrine  of  Mill  into  the  field  of  practical 
operation  and  observe  the  result.  Since,  in  agriculture,  a  part 
of  the  capital  employed  is  land,  which  is  not  the  product  of 
labor,  we  will  assume  that  only  one-half  of  the  capital  employed 
is  the  product  of  labor,  and  the  other  half  land,  the  total  capital 
being  the  same  as  that  used  in  manufacturing  as  compared  with 
product,  although  it  is  in  fact  much  greater. 

The  result  of  the  labor  of  one  hundred  men  employed  in  agri- 
culture, and  working  one  year  at  the  wages  stated,  would  be  as 
follows : 

Wages  of  100  men  one  year,  at  $1.00  per  day  ....  $30,000 

Interest  on  $50,000  capital,  at  six  per  cent 3,000 

$50,000  capital  in  land,  interest  value  six  per  cent.    .  3,000 

Waste  of  capital  per  annum    . 3,000 

Total  value  of  agricultural  product $39,000 

Now,  if  we  desire  an  agricultural  product  sufficient  to  purchase 
the  $53,000  worth  of  English  manufactured  goods,  since  $53,000 
is  1.359  times  $39,000,  we  must  multiply  each  of  the  above  items 
by  1.359.     We  obtain  as  the  result : 

135.9  men  one  year,  at  $1.00  per  day $40,770 

$67,950  capital,  at  six  per  cent 4,077 

Waste  of  capital 4,077 

Six  per  cent,  on  $67,950  (value  of  land) 4,077 

Total  value  of  product $53,001 

Now,  if  we  exchange  this  agricultural  product  for  the  Eng- 
lish manufactured  product,  the  market  value  of  each  being  the 
same,  there  is  a  loss  to  American  labor  of  twenty-six  per  cent., — 
that  is,  it  requires  135.9  men  to  produce  what  is  exchanged  for 
the  product  of  one  hundred  men. 


236  THE  DISTRIBUTION   OF  WEALTH. 

This  labor  that  is  lost,  rated  at  one  dollar  per  day,  amounts  to 
$10,770 ;  valued  at  $1.50  per  day,  the  price  assumed  for  English 
manufacturing  labor,  it  amounts  to  $16,155. 

By  reason  of  the  use  of  land  in  production  there  is  a  saving 
of  the  use  of  $32,050  of  labor-created  capital,  which  at  six  per 
cent,  amounts  to  $1830,  and  the  not  result  is  a  loss  to  the 
people  of  the  United  States  of  $8940,  or  $14,325,  according  to 
which  standard  of  wages  we  adopt  as  the  measure  of  the  value 
of  labor.  The  true  measure,  however,  of  the  loss  or  gain  is  the 
amount  of  labor  saved  or  lost.  Stated  in  terms  of  labor,  there  is 
a  loss  of  twenty-six  per  cent. 

To  purchase  of  the  American  manufacturer  the  same  product 
(that  is,  the  product  of  the  labor  of  100  men)  as  was  purchased 
from  the  English  manufacturer  for  fifty-three  thousand  dollars, 
would  require,  on  the  basis  of  the  wages  and  interest  assumed, 
Beventy-two  thousand  dollars,  which  would  require  the  product 
of  the  labor  of  184.6  men  employed  in  agriculture.  It  would, 
therefore,  apparently  be  to  the  interest  of  the  agricultural  class 
— regarding  those  engaged  in  agriculture  as  a  distinct  class,  and 
ignoring  the  movement  of  labor  from  one  industry  to  another — 
to  purchase  of  England ;  and  yet  it  is  nevertheless  clearly  in 
the  interest  of  an  increased  total  production  of  American  wealth 
to  purchase  of  the  home  manufacturer.  The  increase  of  the 
wealth  of  a  nation  dej)ends  upon  production,  but  the  increase 
of  the  wealth  of  any  class  of  producers  depends  not  only  on 
production,  but  also  on  distribution. 

But  that  which  may  be  to  the  apparent  interest  of  a  class, 
and  which  may  be  to  their  immediate  interest,  may  be  far  from 
their  true  interest.  If  the  exchange  of  the  products  of  American 
agriculture  for  the  products  of  English  manufacture  be  not 
interrupted  in  some  manner,  the  conditions  which  bring  about 
such  exchange  on  unequal  terms  tend  to  perpetuate  themselves 
indefinitely,  as  the  history  of  these  two  classes  of  industry 
abundantly  shows. 

Adam  Smith,  speaking  of  the  wages  of  labor,  says,  "  The 
wages  of  labor  in  a  great  town  or  its  neighborhood  are  fre- 
quently a  fourth  or  a  fifth  part — ^twenty  or  twenty-five  per  cent. 
— higher  than  at  a  few  miles'  distance.  Eighteen  pence  (36 
cents)  a  day  may  be  reckoned  the  common  price  of  labor  in 


THE  DISTRIBUTION  OF  WEALTH.  237 

London  or  its  neighborhood.  At  a  few  miles'  distance  it  falls  to 
fourteen  and  fifteen  ponce.  Ten  pence  may  be  reckoned  its 
price  in  Edinburgh  and  its  neighborhood.  At  a  few  miles' 
distance  it  falls  to  eight  pence,  the  usual  price  of  common 
labor  through  the  greater  part  of  the  low  country  of  Scot- 
land, where  it  varies  a  good  deal  less  than  in  England."  And 
yet,  at  the  time  of  which  he  wrote  (1775),  he  says,  "  Grain, 
the  food  of  the  common  people,  is  dearer  in  Scotland  than  in 
England." 

In  1835  the  average  wages  of  a  day-laborer  in  agriculture 
were,  in  England  twenty  pence,  Scotland  sixteen  pence,  Ireland 
eight  pence ;  in  1880  the  rate  was,  England  thirty  pence,  Scot- 
land twenty-eight  pence,  Ireland  eighteen  pence.  The  average 
annual  earnings  of  the  working-class  in  1882  were,  in  England 
8305,  Scotland  $247.50,  Ireland  $121.75.  In  1882  the  wealth  of 
England  was  $35,890,000,000,  that  of  Scotland  $4,950,000,000, 
that  of  Ireland  $2,760,000,000  (Mulhall).  The  foregoing  statis- 
tics illustrate  the  relative  power  of  manufacturing  and  agricul- 
ture in  accumulating  wealth. 

Now,  suppose  that,  instead  of  buying  the  products  of  manu- 
facture abroad  with  the  products  of  agriculture  raised  at  home, 
we  convert  the  necessary  amount  of  agricultural  labor  required 
to  produce  the  fifty-three  thousand  dollars'  worth  of  manufact- 
ured product  into  manufacturing  labor.  The  land  we  cannot 
convert  into  other  forms  of  capital,  so  we  have  the  labor  of  135.9 
men  and  $67,950  of  capital  to  employ  in  manufacturing.  To 
make  up  the  requisite  amount  of  capital  corresponding  to  the 
number  of  men,  it  will  require  the  sum  of  $135,900.  We  already 
have  $67,950,  and  we  must  create  or  borrow  $67,950  more, 
to  replace  the  land  which  we  may  suppose  to  lie  idle.  The 
result  will  be, — 

Labor  of  135.9  men  one  year,  at  $1.50  per  day  .    .   .      $61,125 
Interest  on  capital,  $135,900,  at  four  per  cent.    .   .    .  5,436 

Wear  of  machinery 5,436 

Total  value  of  product  (English  prices)    .   .   .      $71,997 

Subtract  additional  cost  of  American  capital,  which 

would  be  two  per  cent 5,436 

Net  product  of  labor  and  capital $66,561 


238  THE  DISTEIBUTION   OF  WEALTH. 

Brought  forward |66,561 

Value  of  the  agricultural  product  of  same  labor  and 
capital  before  it  was  converted,  measured  in  Eng- 
lish manufactured  product  for  which  it  exchanged 
$53,000,  to  which  we  add  $4177,  six  per  cent,  on 
the  additional  capital  called  into  use,  and  we  have  .       57,177 

Net  gain  from  conversion  of  labor  ......        $9,384 

I  have  carried  the  element  of  interest  on  capital  into  the 
foregoing  analysis,  not  because  it  belongs  there,  but  because  we 
are  accustomed  to  regard  interest  as  a  part  of  the  cost  of  pro- 
duction. Interest,  however,  when  we  are  considerins:  the  cost 
of  production  to  a  whole  people,  is  not  a  part  of  the  cost  of 
production,  unless  capital  borrowed  from  a  foreign  people  be 
employed.  "When  regarded  in  any  problem  embracing  the 
nation  at  large,  interest  is  an  element  of  distribution,  and  does 
not  represent  consumption  of  capital,  but  merely  a  transfer  of 
product  from  one  person  to  another.  The  wear  and  waste  of 
buildings  and  machinery  in  either  country,  measured  in  labor, 
is  the  same.  So  that  the  real  gain  is  the  labor  that  is  saved, 
which,  measured  by  the  value  of  the  product,  is  $16,125. 

Now,  while  the  value  of  a  certain  amount  of  labor  in  one 
countiy,  measured  by  the  quantity  of  product,  is  the  equivalent 
in  value  of  a  like  amount  of  labor  of  the  same  grade  in  another 
country,  except  as  natural  advantage  of  location  or  climate  may 
somewhat  increase  the  productive  power  of  the  labor  in  one 
country  above  that  of  an  equal  amount  of  labor  in  another 
country,  yet,  in  the  conversion  of  the  cheaper  into  the  more 
productive,  and  therefore  more  valuable,  forms  of  labor,  there 
is  a  very  great  gain. 

The  mistake  of  writers  on  this  branch  of  political  economy 
consists,  first,  in  ignoring  the  facts  that  the  value  of  labor  de- 
pends upon  how  it  may  be  employed ;  that  the  value  of  different 
classes  of  labor,  when  measured  in  the  price  of  the  product, 
varies  widely,  and  that  the  cheaper  forms  of  labor  may  be 
readily  converted  into  the  more  valuable  forms ;  and,  secondly, 
in  treating  interest  as  an  element  of  the  cost  of  production 
(which  as  between  individuals  it  is),  and  not  as  merely  a  factor 
in  the  process  of  distribution. 

Eeducing  these  deductions  to  the  form  of  an  abstract  general- 


THE  DISTRIBUTION  OF  WEALTH.  239 

ization,  I  would  say  that  it  is  not  to  the  interest  of  any  people 
to  produce  a  commodity  requiring  an  amount  of  labor  relatively 
large  in  proportion  to  value  of  product,  for  the  purpose  of  export 
and  exchange  for  the  product  of  another  form  of  industry 
representing  an  amount  of  labor  relatively  small  according  to 
value.  Whenever  a  necessity  exists  which  compels  the  exchange 
of  the  product  of  two  days'  labor  for  the  product  of  one  day's 
labor,  true  economy  requires  a  policy  that  will  remove  that 
necessity. 

Labor  does  not  readily  transfer  itself  from  one  industry  or 
form  of  production  to  another.  Common  labor  and  labor 
employed  in  agriculture  will  continue  to  be  so  employed  until 
converted  by  capital  into  other  forms  of  production.  The  fact 
that  it  may  be  to  the  interest  of  a  people,  as  a  whole,  to  create 
and  carry  on  a  particular  industry,  is  not  alone  sufficient  to 
divert  labor  and  capital  into  such  new  industry.  Capitalists 
must  first  be  convinced  that  such  industry  will  yield  the  usual 
profits  on  the  capital  invested ;  or  else  a  reduction  must  first 
take  place  in  the  profits  on  capital  invested  in  the  industries 
in  general,  by  which  the  average  rate  of  profit  on  capital  is 
brought  below  that  which  the  industry  sought  to  be  introduced 
may  be  made  to  yield. 

While  it  was  clearly  to  the  interest  of  the  people  of  the 
United  States  to  do  their  own  manufacturing,  yet  so  long  as 
capital  could  be  more  profitably  employed  in  other  ways  it  was 
not  to  the  interest  of  capital  to  engage  in  manufacturing ;  or, 
rather,  it  was  not  to  the  interest  of  any  particular  capitalist  to 
do  so.  The  imposition  of  a  high  tariff  on  cloth,  and  on  iron  and 
steel,  brought  the  profits  of  capital  employed  in  the  manufact- 
ure of  these  products  up  to  or  above  the  general  level  of  the 
profits  of  capital  otherwise  invested. 

The  result  of  a  high  tariff  was  a  phenomenal  growth  of  all 
protected  industries.  By  the  transfer  of  labor  from  one  industry 
to  another  the  productive  power  of  American  labor  was  wonder- 
fully increased.  There  followed  a  corresponding  increase  in 
national  wealth,  and  also  a  corresponding  aggregation  of  wealth. 
This  great  increase  of  wealth  represents  so  much  labor  saved  by 
changing  it  into  more  productive  forms. 

The  natural  effect  of  this  great  increase  of  wealth  would  have 


240  THE  DISTEIBUTION  OF  WEALTH. 

been,  by  force  of  the  competition  of  accumulated  capital,  em- 
ployed and  seeking  employment  in  manufacturing  industries,  to 
force  profits  to  a  much  lower  rate  than  has  been  reached.  But 
the  building  of  railways,  the  issue  of  a  large  amount  of  govern- 
ment, State,  and  municipal  bonds,  the  disposition  of  the  agri- 
cultural classes  to  employ  borrowed  capital  to  invest  in  agri- 
culture and  increase  the  volume  of  the  product  already  equal  to 
the  demand  at  a  fair  price,  and  other  openings  for  the  invest- 
ment of  capital  at  a  high  rate  of  profit,  have  enabled  manufact- 
urers to  maintain  a  margin  of  profit  much  greater  than  they 
otherwise  could  have  done. 

The  equilibrium  of  the  industries  has  been  disturbed  by  causes 
growing  out  of  the  late  war,  the  rapid  introduction  of  machin- 
ery, and  the  extension  of  the  agricultural  area.  The  rapid 
growth  of  wealth,  instead  of  weighing  down  the  profits  of  man- 
ufacturing, as  it  must  have  done  under  other  conditions,  has 
been  absorbed  by  other  industries  and  other  enterprises ;  and 
manufacturing  has  been  relieved  from  a  burden  of  competition 
that  of  its  own  weight  would  have  borne  down  prices  of  the 
products  of  manufacture  to  a  point  more  nearly  approximating 
the  value  of  the  product  of  an  equal  amount  of  capital  employed 
in  agriculture. 

The  amount  of  capital  accumulated  in  other  industries,  and 
aggregated  by  speculation,  which  has  been  loaned  on  farms, 
much  of  it  at  a  high  rate  of  interest,  has  of  itself  been  large 
enough  to  so  increase  the  product  of  agriculture  as  to  greatly 
reduce  the  value  of  the  product  of  that  industry  in  the  market ; 
and  thus,  by  lowering  the  price  of  food,  relatively  enhancing 
the  value  of  the  products  of  manufacture. 

The  rapid  extension  of  the  cultivated  area,  for  which  unoccu- 
pied public  lands  furnished  the  opportunity,  is  largely  attrib- 
utable to  the  effect  of  investments  of  accumulated  capital  in  the 
form  of  mortgage-loans  on  agricultural  lands. 

There  has  been  a  glut  of  wealth  which  has  not  been  properly 
assimilated  by  the  various  industries,  and  agriculture  has  been 
the  principal  sufferer.  A  more  healthy  condition  will,  in  time, 
be  brought  about  by  the  unaided  and  unhindered  operation  of 
economic  forces  ;  but  the  present  condition  tends  greatly  to  aid 
the  process  of  aggregating  the  wealth  of  the  country. 


THE  DISTRIBUTION  OP  WEALTH.  241 

So  far,  we  have  considered  the  effect  upon  production  of  a 
diversion  of  labor  from  one  form  of  industry  to  another.  We 
have  shown  that  the  product  is  greatly  increased  by  a  con- 
version of  cheap  labor  into  labor  of  a  higher  grade,  or  by  the 
conversion  of  labor  engaged  in  the  production  of  low-priced 
commodities  into  labor  producing  high-priced  commodities.  It 
remains  to  consider  the  effect  upon  distribution. 

Withdrawing  labor  from  any  industry  tends  to  reduce  the 
product,  and  thereby  to  increase  the  price  of  the  product  of  such 
industry;  while  increasing  the  amount  of  labor  employed  in  an 
industry  increases  the  product  and  reduces  the  price.  Prices 
in  the  several  industries,  therefore,  tend  to  approach  a  common 
level ;  and  the  prices  of  labor  in  all  industries  would  attain  a 
common  standard  if  the  operation  of  this  tendency  were  not 
obstructed  by  certain  causes.  What  are  they?  First,  different 
forms  of  production  require  different  degrees  of  intelligence  and 
skill,  and  skilled  labor  does  not  come  in  direct  competition 
with  unskilled  labor.  Common  labor  cannot  be  converted  into 
skilled  labor  at  will,  but  must  await  the  slow  process  of  educa- 
tion and  training.  The  immediate  interest  of  skilled  laborers  is 
to  prevent  the  increase  of  skilled  labor.  The  process  of  edu- 
cation and  industrial  training  is  therefore  hindered,  not  only 
by  the  natural  difficulties  that  attend  the  education  of  a  people, 
but  also  by  the  opposition  or  indifference  of  those  who  already 
occupy  the  field  of  employment  in  the  higher  grades  of  industry.* 

There  is  another  more  potent  influence.  Capital  employed  in 
agriculture  is  fixed.  Much  of  it — indeed  the  greater  part — 
cannot  be  withdrawn  at  all,  and  the  remainder  cannot  be  readily 
withdrawn.  It  is  chiefly  in  the  hands  of  those  whose  labor  is 
employed  in  production,  and  it  is  impracticable  to  greatly  reduce 
the  labor  force  employed,  so  as  to  keep  production  within  the 
limits  of  the  effective  demand,  at  a  price  sufficient  to  yield  a 


*  The  mistaken  policy  of  discouraging  the  apprenticeship  of  boys  and 
young  men  in  the  mechanical  trades  with  a  view  to  maintaining  wages  has 
been  generally  pursued,  and  in  consequence  we  have  been  receiving  annu- 
ally from  Europe  large  numbers  of  skilled  artisans  to  occupy  the  places 
which  should  be  filled  by  artisans  educated  at  home.  The  true  policy  is  to 
encourage  industrial  training. 

16 


242  THE  DISTRIBUTION   OF  WEALTH. 

liberal  compensation  for  the  labor  employed  and  a  fair  profit 
on  the  capital  invested. 

In  manufacturing  industries,  when  prices  tend  downward,  the 
labor  force,  as  well  as  the  capital  employed,  may  be  readily 
reduced.  As  the  capitalist  and  the  laborer  are  not,  as  they 
generally  are  in  agriculture,  the  same  person,  the  labor- force 
may  be  reduced  without  serious  detriment  to  the  controlling 
force,  capital ;  and  the  requisite  amount  of  capital  may  be  with- 
drawn, and  invested  whenever  an  opportunity  for  greater  profit 
may  invite. 

To  the  individual  agriculturist,  production  varies  with  the 
changing  seasons,  and  values  are  unstable.  The  amount  of  the 
product  cannot  be  regulated  to  meet  a  known  demand,  nor 
estimated  beforehand.  When  the  product  is  ready  for  the 
market,  it  must  be  sold  at  a  price  fixed  by  conditions  not  within 
the  control  of  the  producer.  "While  the  manufactured  product 
is  often  sold  before  made,  the  price  fluctuates  within  narrow 
limits,  and  when  the  market  is  heavy  the  manufacturer  may 
hold  his  product  longer  to  await  a  more  active  demand ;  for  his 
commodities  will  keep,  and  may  be  cheaply  stored.  When  the 
farmer's  hogs  or  horses  or  cattle  are  matured,  they  must  be 
sold ;  for  the  cost  of  keep  will  always  soon  outrun  an  advance 
in  market  values.  When  the  farmer  sells  his  wheat,  corn,  or 
cattle,  he  asks,  "  What  will  you  give  ?"  The  manufacturer  and 
the  merchant  says  what  he  will  take.  While,  therefore,  agri- 
culture, as  an  industry,  possesses  many  advantages,  it  is  also 
attended  by  disadvantages  inherent  in  fixed  conditions. 

When  laborers  are  thrown  out  of  employment  in  other  indus- 
tries, they  resort  to  the  field  of  agriculture,  where  they  may 
produce  at  least  their  own  food  and  a  small  surplus  for  the 
market.  This  is  to  the  advantage  of  those  who  would  otherwise 
be  without  means  of  subsistence,  but  a  detriment  to  agriculture, 
the  industry  on  which  at  any  time  may  be  precipitated  the  un- 
employed labor  of  other  industries  which,  when  prices  go  down, 
relieve  themselves  of  a  superabundance  of  labor  at  its  expense. 
Land,  however,  is  a  limited,  fixed  quantity.  The  area  of  cultiva- 
tion will  soon  reach  the  limit  beyond  which  it  may  not  extend. 
The  demand  for  food-products  will  begin  to  approximate  the 
limit,  beyond  which  production  can   be  increased  only  by  an 


THE  DISTRIBUTION  OF   WEALTH.  243 

active  demand  for  more  food.  Agricultural  values  will  thon 
acquire  greater  stability,  and,  while  they  will  continue  to  fluctu- 
ate, it  will  be  within  more  narrow  limits.  Ordinary  economic 
forces  will  then  operate,  with  effect,  to  restore  a  greater  equi- 
librium of  values,  except  in  so  far  as  prevented  by  the  power  of 
aggregated  capital  lo  restrain  or  pervert  natural  tendencies. 

It  is  with  a  view  to  the  destruction  of  the  power  of  aggre- 
gated wealth  to  control  values  that  many  are  turning  their 
attention  towards  the  abolition  of  protective  duties.  But  should 
they  accomplish  their  purpose,  it  will  be  but  another  instance 
of  Samson  pulling  down  the  temple  to  destroy  the  Philistines. 
The  abolition  of  protective  duties  would  undoubtedly  to  some 
extent  reduce  the  prices  of  the  products  of  manufactures.  This 
reduction  of  prices,  it  is  claimed,  would  be  brought  about  by  the 
importation  of  the  products  of  foreign  manufacture.  But  what 
would  be  the  ultimate  results  ?  What  we  buy  abroad  we  have 
no  need  to  produce  at  home.  The  product  of  American  manu- 
factures would  therefore  fall  off,  and  the  weaker  establish- 
ments now  doing  business  on  a  narrow  margin  of  profit  give 
way.  We  would  in  time,  in  some  measure,  divide  the  foreign 
trade  with  England  and  other  countries,  at  prices  below  those 
at  which  foreign  markets  are  now  supplied.  In^a  foreign  trade 
England  enjoys  this  advantage:  she  needs  that  which  her 
foreign  consumer  has  to  sell, — food, — while,  except  as  to  a  few 
commodities,  our  home  food-supply  is  already  more  than  ade- 
quate to  the  demand.  A  sale  of  the  products  of  our  manufact- 
ures in  foreign  countries,  beyond  the  amount  of  our  present 
sales,  means  the  purchase  of  an  increased  amount  of  foreign 
products  to  be  placed  on  our  markets  in  competition  with  our 
established  agricultural  industries,  and  a  consequent  fall  in 
prices.  The  reduction  of  duties  on  products  of  foreign  manu- 
facture means,  in  the  first  instance,  a  reduction  of  the  labor- 
force  employed  in  manufacturing  at  home,  and  an  increase  of 
agricultural  laborers ;  it  means  the  conversion  of  labor  of  high 
productive  value  into  common  labor  of  low  value ;  it  means  a 
disarrangement  of  values,  doubt,  hesitation,  and  distrust,  until 
after  such  time  as  may  be  required  for  a  readjustment;  it  means 
the  reduction  of  all  wages  and  of  all  values  to  a  lower  level,  and 
a  consequent  relative  enhancement  of  the  value  of  credits ;  it 


244  THE  DISTRIBUTION  OF  WEALTH. 

means  more  labor  and  more  property  to  pay  the  same  debt ;  it 
means  a  wreck,  from  which  the  strongest  will  gather  the  salvage, 
— a  wreck  in  which  labor  will  lose  and  from  which  capital  will 
gain.  "When  the  debris  is  cleared  away,  Samson  will  be  found 
buried  beneath  the  pillars  of  the  temple,  and  a  few  Philistines 
will  be  found  alongside;  but  a  crowd  of  Philistines  will  view 
the  ruins  and  rejoice  that  Samson  is  dead. 

If  there  be  any  remedy  for  the  present  inequitable  distribution 
of  the  products  of  labor,  for  the  absorption  by  capital  of  the 
savings  of  labor,  that  remedy  must  be  found  in  legislative  re- 
strictions, modes  of  taxation,-  and  in  industrial  training. 

The  control  which  the  people  of  the  United  States  may  ex- 
ercise by  means  of  legislation  over  social  and  economic  tenden- 
cies is  confined  to  the  limits  of  our  own  country.  But  if  Amer- 
ican labor  is  compelled  to  compete,  in  an  open  market,  with  all 
grades  and  classes  of  labor  throughout  the  world,  then  American 
labor  must  rest  content  to  accept  a  scale  of  prices  determined 
by  conditions  which  exist  in  other  countries,  and  which  we  have 
no  power  to  change.  The  less  we  are  subject  to  the  influence 
of  economic  forces,  determined  by  inequalities  of  wealth  and 
social  condition  that  exist  abroad,  the  more  effective  will  be  the 
measures  upon  which  we  must  rely  for  an  escape  from  that 
bondage  of  eternal  poverty  which  is  the  fate  of  laboring  mil- 
lions in  Europe.  Foreign  trade  we  need,  to  the  extent  that  toe 
need  tJie  products  of  foreign  countries,  but  not  for  the  purpose  of 
carrying  on  a  war  of  competition  between  American  and  Euro- 
pean labor.  In  such  a  contest,  as  I  have  shown  elsewhere,  the 
gain  is  to  the  people  whose  production,  measured  by  the  amount 
of  labor  employed,  is  relatively  large,  and  the  loss  is  to  the 
people  whose  consumption  is  relatively  great. 

It  is  frequently  asserted  that  the  immigration  of  foreign 
laborers  has  the  same  effect  upon  American  labor  as  the  free 
importation  of  the  products  of  foreign  labor.  This  is,  in  a 
measure,  true ;  and  there  should  be  some  restriction  upon  immi- 
gration. We  cannot  afford  to  permit  the  United  States  to  be 
made  a  dumping-ground  for  the  paupers  and  criminal  classes  of 
Europe.  But  the  average  European  in  America  soon  becomes 
an  American.  He  adapts  himself  to  his  new  environment,  and 
is  subject  to  the  laws  of  production  and  of  distribution  which 


THE  DISTRIBUTION  OF  WEALTH.  245 

prevail  here ;  and  legislation  that  could  not  reach  him  in  Europe 
will  reach  him  as  an  American  citizen. 

When,  in  any  year,  the  number  of  immigrants  is  very  large, 
the  equilibrium  of  labor  values  is  disturbed,  wages  are  reduced, 
or  labor  is  idle.  In  order  that  absorption  and  assimilation  of 
foreign  labor  may  keep  pace  with  immigration,  we  should  in 
some  manner  guard  against  the  too  rapid  increase  of  our  foreign 
population.  During  the  last  two  decades  immigration  has  been 
invited  and  encouraged  in  a  manner  which  ought  not  to  have 
been  permitted.  But  the  American  people  have  always  ap- 
peared in  haste  to  see  their  unoccupied  lands  settled  and  under 
cultivation.  Whatever  measures  would  stimulate  the  growth 
of  the  country  and  swell  the  census  roll  it  has  been  considered 
good  statesmanship  to  adopt.  The  resounding  platitudes  of 
Fourth  of  July  oratory  have  not  been  without  effect  in  shaping 
national  legislation. 

In  England,  until  after  the  time  when  manufacturing  in- 
dustries in  that  country  had  reached  a  stage  of  development 
that  made  protective  duties  unnecessary  and  ineffective,  the 
policy  of  protection  was  rigidly  adhered  to.  The  agriculturist 
was  protected  by  duties  on  corn  and  meat,  and  the  manufact- 
urer by  various  duties  and  restrictions  designed  to  place  him 
in  the  position  of  greatest  advantage  in  competition  with  foreign 
products.  The  agricultural  area  of  Great  Britain  was  not, 
however,  sufficient  to  supply  the  food-products  required  by  the 
large  and  growing  population  of  that  densely-populated  country; 
and  owing  to  the  limited  land  area  the  effect  of  protective  duties 
on  agricultural  products  was  not  marked  by  a  corresponding 
increase  of  the  product  protected, — a  result  which  it  is  one  of 
the  chief  objects  of  a  protective  duty  to  accomplish ;  and,  since 
the  lands  were  in  possession  of  a  few  landlords,  the  duty  was 
necessarily  at  the  expense  of  the  working-people,  and  in  the 
interest  of  those  who  were  already  enriched  by  means  of  an 
oppressive  monopoly,  and  to  whom  a  protective  duty  afforded 
the  opportunity  for  still  greater  exactions,  such  a  policy  could 
be  maintained  only  until  its  effects  were  oppressively  felt  and 
clearly  perceived. 

By  the  aid  of  protective  duties,  far  less  needed  in  that  country 
than  in  this,  the  manufacturing  industries  of  Great  Britain 


246  THE   DISTRIBUTION  OF  WEALTH. 

were  rapidly  developed  and  carried  to  the  highest  degree  of 
perfection.  When  this  result  had  been  reached,  the  protective 
policy  had  served  its  purpose  and  was  no  longer  required.  The 
interests  of  the  English  people  demanded  foreign  trade;  the 
sale  of  naanufactured  products  abroad  was  absolutely  necessary, 
in  order  to  enable  them  to  procure  the  food  which  the  agricul- 
tural area  of  that  country  was  not  adequate  to  produce.  Eng- 
land had  become  able  to  compete  with  every  other  country  in 
foreign  markets;  no  other  people  could  successfully  compete 
with  her  in  her  own.  Protective  duties  were  no  longer  neces- 
sary ;  nor  could  a  policy  of  restraining  the  importations  of  the 
same  class  of  products  that  the  English  manufacturer  was 
offering  for  sale  in  every  foreign  mart  be  pursued,  without 
sanctioning  a  doctrine  which  had  ceased  to  be  useful  to  the 
English  people,  and  which  it  had  become  their  interest  by  every 
means  to  discourage. 

The  conditions  which  make  protective  duties  available  to 
promote  the  industrial  welfare  of  a  people  have  in  England  long 
since  ceased  to  exist.  The  protective  policy  of  other  countries 
is  of  course  detrimental  to  English  interest,  since  by  it  the 
market  for  English  manufactures  is  restricted,  and  manufactures 
which  represent  the  highest  and  most  valuable  form  of  labor 
are  the  only  products  of  considerable  value  which  England  has 
to  sell. 

It  is  not,  therefore,  surprising  to  find  English  economists, 
with  scarcely  an  exception,  insisting  that  absolute  free  trade 
is  the  only  policy  consistent  with  the  true  principles  of  economic 
science,  and  as  far  as  England  or  English  interests  are  concerned 
they  are  undoubtedly  right.  With  the  development  and  growth 
of  manufacturing  skill  throughout  the  world,  the  prosperity  of 
England,  and  of  every  country  whose  food-product  is  limited 
below  the  requirements  of  her  population,  must  decay.  Her 
position  depends  on  inequalities  of  industrial  development 
among  the  nations  of  the  earth. 

In  the  United  States  the  policy  of  protection  was  inaugurated 
immediately  after  the  organization  of  the  government,  by  the 
levy  of  duties  on  imports  ranging  from  ten  to  fifteen  per  cent. 
These  duties  at  the  beginning  of  the  war  of  1812  were  doubled. 
In  1816  an  act  was  passed  reducing  the  rate  and  establishing 


THE  DISTRIBUTION  OP   WEALTH.  247 

what  was  regarded  as  a  moderate  protective  tariif.  The  sudden 
transition  from  the  high  duties  that  had  prevailed  to  compara- 
tively low  rates  occasioned  a  serious  disturbance  of  industry, 
which  had  been  greatly  stimulated  by  the  high  tariff  that  was 
repealed.  The  act  of  1816,  with  few  substantial  changes,  re- 
mained in  force  until  1824,  when  what  was  known  as  the  Clay 
tariff  act  was  passed,  imposing  new  duties  and  raising  those  on 
most  woollen  goods.  In  1828  there  was  an  increase  of  duty  on 
many  articles,  and  in  1832  an  act  was  passed  reducing  the  rates 
on  some  articles  and  raising  them  on  others. 

In  1833  what  was  known  as  the  Clay  compromise  tariff  was 
adopted.  This  act  provided  for  a  reduction  of  all  rates  in  excess 
of  twenty  per  cent,  to  twenty  per  cent,  ad  valorem^  by  remit- 
ting one-tenth  of  the  excess  after  December,  1835,  one-tenth 
after  December,  1837,  one-tenth  after  December,  1839,  one-half 
the  remaining  excess  in  December,  1841,  and  the  remainder  in 
December,  1842. 

In  1842  the  Whig  tariff  was  adopted,  establishing  high  pro- 
tective duties  on  most  articles  of  domestic  manufacture,  making 
an  average  rate  on  dutiable  goods  of  33.47  per  cent.  This  act 
continued  in  force  until  1846,  when  it  was  repealed,  and  what  is 
known  as  the  Walker  tariff,  from  the  name  of  the  Secretary  of 
the  Treasury,  was  adopted.  This  act  reduced  the  average  rate 
on  dutiable  goods  to  26.22  per  cent.  Eeductions  on  most  of  the 
articles  in  the  tariff  schedule  of  1846  were  made  in  1857,  lower- 
ing the  average  rate  to  20.12  per  cent. ;  but  on  many  articles  the 
tariff  of  1846  remained  in  force  till  1861,  when  the  Morrill  tariff 
was  adopted.  This  was  a  highly-protective  tariff,  and  many 
rates  were  subsequently  reduced.  Since  1861  rates  have  been 
reduced,  but  there  has  been  no  change  of  policy.  The  present 
schedule  is  made  up  largely  of  specific  duties,  but  the  average 
rate  at  the  present  time  is  equivalent  to  47.08  per  cent,  ad 
valorem. 

During  the  period  from  1810  to  1815  many  mills  and  furnaces 
were  built ;  but  after  the  reduction  of  the  tariff  in  1816,  the 
manufacturing  industry  being  exposed  to  a  degree  of  foreign 
competition  it  was  unable  to  withstand,  many  proprietors  were 
ruined,  and  large  numbers  of  workers  were  turned  out  of 
employment.     From   1828  to   1831  manufacturing  industries 


248  THE  BISTRIBUTION   OP  WEALTH. 

revived,  mills  were  again  erected,  and  there  was  a  rapid  growth 
of  manufacturing  industry ;  but  in  1833  the  protective  policy 
was  again  abandoned ;  the  ruin  of  manufacturers  ensued,  agri- 
culture was  extended,  the  agricultural  product  grew  in  excess 
of  the  demand,  and  the  fate  that  overtook  the  manufacturer 
pursued  the  farmer. 

From  1842  to  1847  there  was  again  a  revival  of  manufact- 
uring industries;  mills  and  furnaces  were  again  constructed 
and  again  closed,  when  the  protective  policy  was  abandoned  for 
the  Walker  tariff  of  1846. 

From  1850  to  1852  the  price  of  flour  fell  below  the  lowest 
prices  that  had  ever  been  known  before.  From  that  time 
forward  to  1861  few  mills  were  erected,  the  old  having  depre- 
ciated in  value  below  the  cost  of  production. 

The  effect  of  the  low  tariff  of  1846  upon  the  general  prosperity 
of  the  country  was  greatly  modified  by  certain  occurrences, 
among  which  was  the  discovery  of  gold  in  California  and  an 
inflation  of  values  resulting  from  an  increase  of  metallic  cur- 
rency.* The  great  famine  in  Ireland,  following  soon  after  the 
enactment  of  the  Walker  law  in  1846,  and  short  crops  in  Europe 
in  the  ensuing  years,  created  a  greatly-increased  demand  for 
the  product  of  agriculture.  Industrial  disturbances  in  Europe, 
occasioned  by  the  revolution  of  1848,  and  followed  by  the 
Crimean  war,  which  began  in  1853  and  ended  in  1856,  which, 
while  it  increased  consumption,  greatly  reduced  the  agricultural 
product,  and  shut  off  the  grain-fields  of  Eussia  from  competition 
with  the  United  States,  stimulated  the  foreign  demand  for 
agricultural  products  and  greatly  relieved  the  depression  natu- 
rally occasioned  by  the  adoption  of  a  low  tariff  policy ;  yet,  not- 
withstanding these  favorable  conditions,  there  followed  in  1857  a 
disastrous  panic,  involving  all  interests  alike,  suspending  in- 
dustrial progress  and  producing  general  stagnation  in  business. 
Henry  C.  Carey,  in  his  book  on  political  economy,  written  in  1858, 
says, "  The  history  of  industry  in  no  civilized  country  of  the  world 
presents  such  a  scene  of  ruin  as  is  found  in  the  manufact- 


*  The  gold  product  of  the  United  States  during  the  period  from  1847  to 
1860  was  over  $600,000,000.  The  circulation,  which  in  1850  was  $265,000,000, 
in  1860  had  increased  to  $487,000,000. 


THE  DISTRIBUTION  OF  WEALTH.  249 

uring,  mining,  and  railroad  history  of  the  United  States.  The 
farmers,"  says  he,  "  are  poor,  and  with  each  successive  year  the 
land  is  being  more  rapidly  exhausted,  and  the  country  exhibits 
many  other  evidences  of  declining  civilization." 

The  repeal  of  the  high-tariff  schedule  of  1842  was  in  great 
measure  owing  to  the  efforts  of  Kobert  J.  Walker,  a  Mississip- 
pian,  who  had  been  made  Secretary  of  the  Treasury  under  Presi- 
dent Polk.  He  claimed  that  manufacturers  were  deriving 
exorbitant  profits  from  the  protected  industries,  to  the  detri- 
ment of  the  agriculturist  and  mechanic.  He  was  no  doubt 
right  in  the  claim  that  the  profits  of  manufacturing  were  rela- 
tively large.  Wealth  has  always  accumulated  in  manufactur- 
ing centres.  Skilled  industry  is  always  the  most  profitable ; 
skilled  labor,  reinforced  by  machinery,  is  the  most  productive. 
This  fact  constitutes  the  principal  reason  for  converting  crude 
labor  into  skilled  labor,  and  employing  it  in  manufacturing  in- 
dustries in  preference  to  buying  manufactured  products  abroad 
and  paying  for  them  in  the  products  of  agriculture. 

Prior  to  the  abolition  of  slavery,  the  South  had  no  interests 
to  be  subserved  by  a  protective  policy.  Her  labor  was  not 
susceptible  of  conversion  into  skilled  labor ;  the  market  for  hei 
principal  product  was  in  London  and  Liverpool  rather  than  in 
the  cities  of  the  American  Union ;  and  it  was  to  her  interest  to 
pursue  a  policy  that  would  insure  the  lowest  possible  prices  for 
food  and  clothing,  neither  of  which  constituted  a  leading 
product  in  the  cotton-producing  States. 

The  same  argument  advanced  by  Walker  in  1842  may  be 
urged  to-day.  The  relatively  large  increase  of  wealth  among 
those  engaged  in  manufacturing  industries,  while  it  does  not 
constitute  a  sound  reason  for  a  modification  of  the  protective 
policy,  affords  a  most  plausible  pretext.  If  the  industrial  co- 
partnership is  continued,  it  must  be  on  the  condition  of  a  more 
equitable  distribution  of  its  advantages.  Manufacturers,  me- 
chanics, agriculturists,  and  miners  constitute  a  single  indus- 
trial entity.  One  class  cannot  exist  without  the  others;  and 
notwithstanding  the  diversity  of  interests  of  the  several  classes, 
they  together  constitute  a  system  of  interdependent  parts, 
operating  together  both  in  production  and  distribution,  and  the 
prosperity  of  each  depends  upon  the  general  prosperity  of  the 


250  THE  DISTRIBUTION   OF  WEALTH. 

whole.  The  values  of  the  products  of  one  class  are  measured  by 
the  products  of  other  classes,  and  are  therefore  relative,  and  not 
absolute.  All  are  therefore  alike  interested  in  maintaining  the 
common  market  to  which  all  products  must  be  contributed,  and 
in  which  all  values  are  measured. 

Says  Mr.  Hoyt,  in  his  work  on  "  Protection  vs.  Free  Trade," — 
"Professors  in  colleges,  the  capitalists  whose  money  is  in- 
vested in  banks,  railroads,  farms,  and  plantations,  worked  b}^ 
tenants,  go  abroad.  In  London,  Paris,  and  Berlin  they  purchase 
many  articles  of  vertu,  household  decoration,  and  personal 
adornment,  which  we  either  cannot  make  at  all,  or  make  as 
cheap  as  the  foreign  artisan,  and  our  travellers  soon  acquire  an 
air  of  condescension  towards  Americans  and  American  products  ; 
they  are  fond  of  reckoning  the  cost  in  pence  and  pounds  ster- 
ling. On  their  return  they  are  landed  at  the  custom-house,  and 
the  wealth  they  are  bringing  into  the  country  in  the  shape  of 
gloves,  corsets,  and  the  like,  is  intercepted  long  enough  to  enable 
the  government  to  collect  the  share  of  taxes  which  they  ought 
to  contribute  to  the  common  revenue.  The  professors  and  the 
capitalists  are  hurt  as  to  their  feelings,  and  proceed  at  once  to 
join  a  free-trade  club." 

The  wages  paid  in  America  for  labor  and  the  salary  paid 
for  professional  service  are  gauged  by  the  American  standard. 
When  measured  in  money,  and  generally  when  measured  in 
any  product  of  labor,  the  compensation  of  labor  here  is  higher 
than  that  made  for  like  services  in  Europe,  because  of  Ameri- 
can institutions,  because  of  protection  to  American  industries, 
because  our  market  is  preserved  to  our  own  people.  He,  how- 
ever, who  enjoys  the  benefit  of  the  American  market,  has  dis- 
charged only  a  part  of  his  obligation  when  he  has  contributed 
the  product  of  his  own  labor  to  that  market;  or  rather,  it 
may  be  said,  when  he  has  sold  his  labor  in  that  market,^  and  en- 
joyed its  special  advantages,  he  has  entered  into  an  obligation 
to  do  his  part  in  maintaining  that  market.  If  he  sells,  he  is 
under  obligation  to  buy.  For  his  own  labor  he  is  entitled  to  an 
equivalent  amount  of  the  products  of  other  labor,  measured  by 
the  same  standard.  He  takes  upon  himself  the  obligation  of 
a  citizen  to  promote  the  common  interests  of  the  industrial  Co- 
partnership into  which  he  enters.     He  is  not  entitled  to  enjoy 


THE  DISTRIBUTION  OP  WEALTH.  251 

a  distributive  share  without  complying  with  conditions  imposed 
on  his  copartners. 

BESSEMER   STEEL. 

The  steel  industry  in  the  United  States  has  been  made  the 
subject  of  frequent  discussion  by  both  the  advocates  and 
opponents  of  protection.  The  friends  of  protection  point  to  the 
phenomenal  growth  of  this  industry  under  the  protection  of  high 
duties,  while  the  advocates  of  a  tariff  for  revenue  only  point  to 
the  phenomenal  profits  which  manufacturers  of  steel  rails  have 
derived  from  capital  invested  in  a  protected  industry. 

Statistics  of  the  Bessemer  Steel  and  Open-Hearth  Steel- Works 
in  the  United  States,  from  census  of  1880,  covering  the  year 
ending  May  30,  1880,  show  the  following : 

Total  number  of  establishments 86 

*'     amount  of  capital  invested  (real  and  personal)    .....  $20,975,999 

Average  capital  to  each  establishment $582,777 

"         number  of  hands  employed  (of  these  there  were  females, 

1 ;  males  below  16,  621) 10,835 

"        wages  of  skilled  workmen  per  day $3.21 

"            "       "  unskilled     "          "     '»      $1.25 

Total  wages  paid  during  the  year $4,930,349 

Average  yearly  wages  of  skilled  workmen $751.14 

"            "          "       "  common      "        $292.60 

Number  of  months  in  active  operation 9 

The  number  of  skilled  workmen  would  therefore  be 3,840 

*'        "         "  unskilled     "             "            "        " 6,995 

Total  value  of  all  materials  used $36,826,928 

»'     number  of  tons  of  product 983,039 

"     value  of  all  products $65,805,210 

Average  value  of  product  per  ton $56.76 

Net  value  of  all  products,  deducting  materials  and  wages  .   .   .  $14,047,933 

Per  cent,  of  capital  represented  by  net  value  of  product  .    ...  66.9 

Number  of  tons  of  Bessemer  steel  rails  embraced  in  this  product  741,475 

Yalue  of  steel  rails  included $37,408,625 

Value  per  ton  of  steel  rails $50.40 

Cost  of  labor  and  material  entering  into  a  ton  of  steel $42.47 

Value  of  pig-iron  used  in  total  product $22,521,098 

Other  materials  used  and  embraced  in  the  foregoing  total 
were  as  follows : 


262  THE  DISTEIBUTION  OP  WEALTH. 

Iron  -  ore,  $59,997  j  spiegeleisen  and  ferro-manganese, 
$2,868,519;  old  steel  rails,  $2,435,463;  Bessemer  ingots  and 
blooms,  $2,300,988  ;  open-hearth  ingots  and  blooms,  $1,129,662 ; 
scrap-iron,  $295,074  ;  scrap-steel,  $2,257,053  ;  hammered  iron-ore 
bloom,  $889,136  ;  pig-  and  scrap-bloom,  $10,500 ;  anthracite  coal, 
$348,752;  bituminous  coal,  $1,087,731;  coke,  $471,618;  char- 
coal, $3461 ;  other  materials,  $138,076. 

It  will  be  observed  that  all  these  materials  represent  labor 
performed.  But,  starting  with  the  ore  or  crude  material,  capi- 
tal derives  a  profit  at  each  stage  of  progress  towards  the  com- 
pleted product.  Profits,  however,  are  comparatively  moderate 
until  the  last  stage  is  reached, — the  conversion  of  pig-iron  into 
steel.  Here  the  amount  set  apart  to  the  credit  of  capital  is  66.9 
per  cent,  on  the  capital  invested.  What  proportion  of  this  large 
margin  is  required  to  maintain  capital — that  is,  to  repair  and  re- 
place worn-out  machinery,  buildings,  and  fixtures — we  have  no 
means  of  ascertaining.  But  if  we  allow  fifteen  per  cent,  for 
maintenance  of  capital,  and  1.9  per  cent,  for  taxes,  there  re- 
mains fifty  per  cent,  to  the  credit  of  profits  or  interest  on 
capital.  The  pig-iron  used  in  making  steel  is  made  in  blast- 
furnaces, of  which  accurate  statistics  are  given.  As  pig-iron 
represents  more  than  half  the  cost  of  materials  entering  into  the 
steel  product  of  which  the  statistics  have  been  given,  the 
statistics  of  the  production  of  pig-iron  and  spiegeleisen  are  here 
presented : 

STATISTICS  OF  BLAST-FURNACES,  1880  (pIG-IRON). 

Number  of  establishments 490 

Total  amount  of  capital  (real  and  personal) 1105,151,176 

Average  capital  to  each  establishment $214,594 

Total  hands  employed 41,875 

Males  above  sixteen  years 40,683 

"      below      "         " .  1,183 

Females 9 

Total  wages  paid $12,680,703 

Average  day's  labor,  twelve  hours. 

«<          "      wages,  skilled  mechanic $1.90 

"  ,        "          "       ordinary  laborer $1.17 

"        time  of  work  during  the  year  (months) 8 

*'        annual  wages  to  each  worker .  $304.27 

'<            "       earnings  of  skilled  laborers $395.20 


THE  DISTRIBUTION  OP  WEALTH.  253 

Average  annual  earnings  of  common  laborers f 244.06 

Total  value  of  materials  used $58,619,742 

"        "     "  product      " $89,316,669 

Net       "     "        "        (deduct  materials  and  wages) $18,016,124 

Per  cent,  which  net  product  is  of  capital 17.13 

Value  per  ton  of  product $23,62 

Oost  of  labor  and  material  per  ton $18.87 

It  will  be  observed  that  in  the  steel  industry  the  average  em- 
ployment was  for  nine  months,  and  in  the  blast-furnace  indus- 
try the  average  time  was  eight  months  of  the  year,  showing  a 
capacity  for  production,  without  increase  of  capital  or  number 
of  workers,  in  the  former  industry,  of  one-fourth,  and  in  the 
latter  industry  of  one-third,  in  excess  of  the  demand  for  the 
products  of  those  industries. 

The  number  of  establishments  engaged  in  making  pig-iron  is 
four  hundred  and  ninety ;  and  the  number  of  establishments 
engaged  in  making  Bessemer  and  open-hearth  steel  is  only 
thirty-six.  The  average  capital  to  each  establishment  in  the 
former  industry  is  $214,594,  and  in  the  steel  industry  the 
average  is  $582,777. 

Had  all  the  blast-furnaces  been  operated  with  full  force 
throughout  the  year,  the  excess  of  product  would  have  destroyed 
values;  no  profit  could  have  been  realized,  but  great  loss  of 
capital  must  have  ensued.  The  same  is  true  of  the  steel 
industry. 

Where  the  number  of  establishments  is  small,  and  particularly 
in  industries  where  the  sale  of  the  product  is  generally  con- 
tracted before  the  product  is  manufactured,  there  is  little  diffi- 
culty in  avoiding  destructive  competition.  And  where  the 
number  of  establishments  is  so  small,  as  in  the  steel  industry, 
and  the  average  capital  employed  so  great,  combinations,  either 
tacit  or  express,  to  advance  prices  beyond  a  reasonable  profit, 
are  easily  effected  and  adhered  to. 

Since  1880  the  price  of  steel  rails  has  fallen  below  what  was 
then  the  cost  of  material. 

In  1860  the  United  States  produced  but  821,223  tons  of  pig- 
iron.  In  1886  the  product  amounted  to  6,365,328  tons.  The 
number  of  tons  of  steel  rails  in  1880  was  741,475,  and  in  1886, 
1,763,667. 


254  THE  DISTRIBUTION  OF  WEALTH. 

The  reduction  in  the  price  of  steel  is  the  result  of  improved 
methods  and  machinery  and  of  increased  competition.  This 
industry,  since  1861,  has  all  the  while  been  in  a  course  of 
development.  In  the  end  it  must  reach  the  status  of  other 
industries,  and  yield  its  excessive  profits  to  the  effect  of  competi- 
tion. And  if,  from  the  necessity  for  the  concentration  of  large 
amounts  of  capital,  the  number  of  establishments  shall  be  lim- 
ited within  the  range  of  effective  combination  to  maintain  un- 
reasonable prices,  there  should  be  no  hesitation  in  applying  the 
remedy  of  foreign  competition,  by  making  a  special  reduction 
in  the  rate  of  duty  on  steel. 

Iron  and  steel  cannot  be  produced  as  cheaply  in  this  country 
as  in  Europe,  for  two  reasons.  The  first  is,  that  wages  in  this 
country  are  comparatively  much  higher ;  and  the  second  reason 
is,  that  in  Europe  the  materials  are  found  in  much  closer  prox- 
imity than  in  the  United  States. 

In  1881  the  price  for  puddling  was  fixed  for  one  year,  by 
agreement  between  employers  and  employes,  at  a  minimum  of 
$5.50  per  ton,  the  price  to  be  advanced  when  bar-iron  advanced 
beyond  two  and  one-half  cents  per  pound.  In  1880  the  mini- 
mum price  was  fixed  at  $4.00  per  ton,  to  be  advanced  to  $4.50 
per  ton  when  bar-iron  advanced  to  two  and  one-half  cents  per 
pound.  While  in  North  England,  the  principal  seat  of  iron 
industry  in  that  country,  the  price  fixed  for  the  same  work  was 
$1.75  per  ton. 

In  the  United  States  materials  are  sometimes  transported  as 
far  as  one  thousand  miles.  Connellsville  coke  is  taken  six  hun- 
dred miles  to  the  blast-furnaces  of  Chicago,  and  seven  hundred 
and  fifty  miles  to  those  of  St.  Louis.  The  average  distance  over 
which  iron-ore  is  transported  in  the  United  States  is  about  four 
hundred  miles,  and  the  average  distance  of  the  transportation 
of  fuel  used  for  smelting  about  two  hundred  miles,  while  in 
Great  Britain  the  materials  are  seldom  required  to  be  trans- 
ported over  one  hundred  miles.  A  considerable  part,  therefore, 
of  the  cost  of  production  in  this  country  is  the  cost  of  trans- 
portation. 

The  following  table  shows  the  fluctuations  in  price  of  steel 
rails  in  England  and  in  the  United  States  during  the  period 
from  1871  to  1882,  inclusive : 


THE  DISTRIBUTION  OF  WEALTH.  255 

^^-,  Price  In  Price  In  the  niffferftnftA. 

Year.  England.  United  States.         Difference. 

1871 $54.99  191.18  $36.19 

1872 67.64  98.43  80.79 

1878 80.05  103.91  23.06 

1874. 68.75  85.76  17.01 

1875 44.28  59.76  14.97 

1876 82.12  44.97  12.75 

1877 29.20  42.08  12.88 

1878 25.55  42.00  16.45 

1879 26.88  48.25  21.37 

1880 34.36  67.50  33.14 

1831 81.53  60.00  28.47 

1882 31.10  57.00  25.90 

The  duty,  during  that  time,  was  twenty-five  dollars  per  ton. 

There  will  be  observed  a  corresponding  fluctuation  in  English 
and  American  prices,  the  price  being  determined  by  the  Ameri- 
can market,  and  not  by  a  fixed  cost  of  production  in  England. 
Had  the  duty  been  less,  English  prices  would  have  been  higher 
and  American  prices  lower. 

The  steel  used  in  the  United  States,  in  the  form  of  steel  rails, 
during  the  period  named,  cost  the  people  of  the  United  States, 
at  the  prices  paid,  $159,312,216  more  than  the  cost  would  have 
amounted  to  at  the  English  prices.  And  therefore  Mr.  John  G. 
Carlisle,  in  a  recent  number  of  the  Forum,  says  that  this  sum 
was  received  by  the  manufacturers  for  their  private  use.  In  making 
this  statement  Mr.  Carlisle  ignores,  first,  the  cost  of  transporta- 
tion of  all  this  steel  from  England  to  points  in  America  as  con- 
venient for  distribution  as  the  several  locations  of  the  American 
steel-works;  second,  the  far  greater  cost  of  materials  in  the 
United  States ;  and,  third,  the  far  greater  cost  of  labor  in  this 
country ;  the  wages  paid  to  skilled  workmen  in  America  being 
about  twice  as  much  as  the  wages  paid  in  England.  So,  while 
it  is  true  that  American  manufacturers  made  large  profits,  the 
amount  is  not  expressed  in  the  sum  stated.  The  cost  of  labor 
and  materials  alone  entering  into  the  manufacture  of  a  ton  of 
steel  rails  in  this  country,  for  the  year  ending  May  30,  1880,  was 
$42.47  ]  while  in  England,  for  the  year  1879,  the  price  of  steel 
rails  per  ton  was  but  $26.88.  In  1880  the  English  price  ad- 
vanced to  $34.36;  the  American  price  having  advanced  from 
$48.25  to  $67.50.    As  the  price  of  the  product  advances,  the 


256  THE  DISTRIBUTION  OF  WEALTH. 

cost  of  material  and  the  price  of  labor  advances,  the  manufact- 
urer, however,  getting  the  larger  share  of  the  increase  in  value. 

If,  instead  of  stimulating  the  manufacture  of  iron  and  steel 
in  this  country  by  means  of  high  duties,  we  had  been  compelled 
to  import  our  iron  and  steel  from  England,  where  we  would 
have  purchased  it,  not  at  the  prices  shown  above  as  the  prices 
that  did  prevail  in  England,  but  at  that  advanced  price  which 
would  have  resulted  to  the  English  manufacturer  from  the 
demand  in  America,  the  effect  of  that  demand,  as  it  increased 
or  diminished,  is  fully  illustrated  in  the  table  above.  When  the 
demand  was  reduced,  as  compared  with  the  capacity  to  produce, 
which  was  all  the  time  increasing,  prices  went  down;  when  the 
demand  increased,  prices  advanced.  In  1877  the  number  of 
tons  made  in  the  United  States  was  432,169,  and  the  price  per 
ton  was  $42.08.  In  1880  the  product  was  968,075  tons,  and  the 
price  w^-s  $67.50  per  ton ;  in  1881  the  product  had  increased  to 
1,355,519  tons,  and  the  price  was  $60.00  per  ton.  In  1882  the 
increase  was  but  small,  the  product  being  1,460,920  tons,  and  the 
price  fell  to  $57.00  per  ton.  Since  then  prices  have  been  going 
down.  The  capacity  to  produce  has  increased,  and  the  pressure 
of  the  demand  is  no  longer  effective  to  maintain  the  high  prices 
that  formerly  prevailed.  The  price  in  1887  fell  to  $27.50  per 
ton,  and  is  now  no  higher  than  in  England. 

Who  paid  for  these  rails  ?  The  railway  companies,  in  the 
first  instance.  And  from  the  railway  companies  the  cost  is 
gradually  distributed,  through  freight  and  passenger  traffic 
charges,  among  the  whole  body  of  the  people. 

The  statement  of  Mr.  Carlisle,  that  the  entire  cost  of  trans- 
portation is  deducted  from  the  price  of  the  agricultural  product, 
is  inconsistent  with  the  theory  maintained  by  the  free-trade 
school  of  political  economists  in  this  country,  tliat  the  consumer 
pays  the  entire  amount  of  the  duty  on  foreign  imports.  Charges 
for  transportation,  as  well  as  the  amount  of  duty  levied  on  im- 
ported goods,  are  divided  between  producer  and  consumer.  No 
principle  of  economic  science  is  better  established. 

Suppose  that,  instead  of  manufacturing  our  own  steel  rails, 
we  had  pursued  the  policy  of  importing  largely  from  England, 
how  would  the  account  now  stand  ? 

First,  as  the  demand  pressed  upon  the  English  market,  prices 


THE  DISTRIBUTION  OF  WEALTH.  257 

would  have  advanced.  Second,  as  our  agricultural  export  re- 
quired to  pay  for  the  increased  imports  grew  in  volume,  it  must 
have  fallen  in  price.  The  consumption  of  food-products  by  the 
English  people  could  have  increased  only  within  narrow  limits, 
and  only  as  prices  fell,  or  as  wages  in  that  country  advanced. 
Third,  a  considerable  portion  of  those  engaged  in  the  iron  and 
steel  industries  would  have  been  compelled  to  seek  employment 
elsewhere,  as  soon  as  the  demand  for  the  product  of  their  labor 
fell  off,  the  market  being  supplied  by  the  English  product.  The 
persons  of  the  personal-service  class,  mechanics  and  others  sup- 
ported by  those  released  from  the  manufacturing  industry,  would 
also  have  been  compelled  to  look  elsewhere.  The  effect  would 
have  been  an  increase  in  the  number  of  agriculturists, — a  class 
already  relatively  too  large. 

The  American  price  of  steel  rails  per  ton  during  the  census 
year  was  850.40.  The  total  value  of  products  in  the  steel 
industry  (deducting  materials)  was '  $18,978,282;  the  value 
created  by  each  worker  being  $1751.50,  the  amount  of  capital 
employed  to  each  worker  being  $1860.  In  agriculture,  the 
average  capital  to  each  worker  was  not  much  less ;  the  average 
product  was  three  hundred  dollars.  If  we  assume  the  English 
price  of  steel  rails,  with  cost  of  transportation  added,  to  have 
been  thirty  dollars  per  ton,  which  is  about  the  true  amount,  the 
labor  of  one  man  in  agriculture,  assuming  that  the  product  in 
England  would  sell  for  enough  more  than  the  farm-price  here  to 
pay  for  transportation,  commissions,  etc.,  would  purchase  ten 
tons  delivered  in  New  York;  while  one  man  in  this  country 
can  produce  with  his  labor  34.7  tons  equal  in  quality  to  those 
of  English  manufacture.  But,  allowing  for  greater  waste  of 
capital  in  the  iron  and  steel  industry,  we  may  say  that  the 
labor  of  one  man  in  the  iron  and  steel  industry,  measured  by 
English  prices,  is  equal  in  value  to  the  labor  of  two  and  one- 
half  men  in  agriculture.  Can  we  then  afford  to  trade  two  and 
one-half  days  of  American  labor  for  one  day  of  English  labor  ? 

This  basis  is  on  the  estimate  of  values  as  they  stood.  But,  had 
we  largely  increased  our  importations,  and  paid  for  the  increase 
with  our  agricultural  product,  the  difference  would  have  been 
much  greater,  for  we  would  have  paid  more  for  rails  and  got 
less  for  our  agricultural  export,  while  agricultural  prices  in 

17 


258  THE  DISTEIBUTION   OF   WEALTH. 

general  would  have  fallen.  We  paid  still  a  higher  price  to  the 
American  manufacturer,  measuring  prices  in  money,  but  a  less 
price  as  measured  by  labor,  and  the  increase  of  wealth  resulting 
from  the  employment  of  our  own  skilled  labor  remains  at  home. 
The  distribution  of  the  increased  wealth  is  in  favor  of  capital,  it 
is  true ;  but  it  is  a  question  of  distribution  and  not  of  production. 
The  remedy  will  not  be  found  in  abandoning  our  protective 
policy  and  transferring  the  profits  to  England,  but  in  a  more 
equitable  distribution  among  our  own  people. 

In  the  rapid  development  of  a  great  industry  like  that  of  the 
production  of  iron  and  steel  in  the  United  States,  these  inequali- 
ties of  distribution  necessarily  arise.  The  large  profits  are  in 
part  attributable  to  the  employment  of  patented  processes  and 
machinery,  the  same  cause  which  so  long  unduly  enhanced  the 
profits  of  the  manufacture  of  agricultural  machinery.  Enormous 
profits  have  likewise  been  made  in  railway  building,  in  land 
speculation,  in  the  mining  of  precious  metals,  and  also  in  trade. 
We  ought  to  be  able  to  find  a  remedy,  without  the  assistance  of 
England.  The  lion  would  no  doubt  be  pleased  to  drive  the 
wolves  away,  but  how  shall  the  lambs  be  protected  from  the 
lion? 

In  Great  Britain,  notwithstanding  low  prices  of  steel  and  of 
other  products  of  manufacture,  the  agricultural  laborer  is  not 
only  absolutely,  but  relatively,  far  poorer  and  more  meanly  paid 
than  in  the  United  States. 

In  England,  as  well  as  in  the  United  States,  the  capitalist 
manages  to  secure  large  profits.  If  prices  are  low,  he  pushes 
down  the  price  of  labor,  but  always  preserves  a  good  margin  for 
himself. 

The  great  American  people  can  never  promote  their  own 
prosperity  by  buying  the  products  of  skilled  labor  in  England, 
and  then,  in  payment,  shipping  wheat  and  cattle  and  corn 
across  the  ocean  to  the  markets  of  Liverpool  and  London, 
already  crowded  with  the  products  of  cheap  labor  from  South 
America,  Australia,  Eussia,  Africa,  and  India.  Western  Europe 
is  the  only  country  importing  wheat  for  home  consumption, 
and  Western  Europe  produces  three-fourths  of  the  wheat 
required  for  home  consumption.  India  produces  from  ten  to 
fifteen  per  cent,  in  excess  of  the  home  demand,  and  South 


THE  DISTRIBUTION  OP  WEALTH.  269 

America,  Australia,  Eussia,  and  Africa  all  grow  wheat  for  export. 
In  1889  the  area  of  the  wheat  crop  in  the  United  States  was 
about  ten  million  acres  in  excess  of  what  is  required  for  home 
consumption.  The  prices  of  late  in  Liverpool  have  been  the 
lowest  that  have  prevailed  during  the  century.  South  America 
possesses  an  unlimited  area  of  fertile  lands  not  yet  brought 
under  cultivation,  and  an  abundance  of  cheap  labor.  By  means 
of  the  construction  of  railways,  the  cultivation  of  wheat  for 
export,  on  the  fertile  lands  of  India,  has  been  greatly  increased. 
Owing  to  the  habits  of  the  laboring-people  of  India,  who,  like 
the  Chinese,  are  content  to  subsist  on  a  few  cents  per  day,  the 
cost  of  production  in  that  country  does  not  exceed  forty  cents 
per  bushel,  and  Indian  wheat  can  be  put  on  the  London  market 
at  sixty  cents  per  bushel.  There  is  no  foreign  demand  for 
our  corn  and  oats,  and  our  export  trade  in  meats  is  subject  to 
competition  with  the  cheap  products  of  South  America  and 
Australia. 

The  European  market  for  the  products  of  American  agricul- 
ture, unless  the  quantity  of  our  export  be  relatively  reduced  for 
at  least  fifty  years  to  come,  must  continue,  as  a  rule,  to  be  a 
market  of  low  prices.  The  industrial  development  of  South 
America,  India,  and  Africa  will  proceed  but  slowly.  They  will 
continue  to  be  fields  of  crude,  cheap  labor,  devoted  chiefly  to 
agriculture,  and  they  will  fill  the  markets  of  Europe  with  their 
surplus. 

European  agriculture  has  suffered  from  the  same  ruinous 
competition  that  has  destroyed  the  profits  of  farming  in  the 
United  States.  The  lands  of  Germany,  France,  and  Great 
Britain  are  covered  with  mortgages,  and  the  distress  of  the 
agricultural  classes  in  those  countries  has  been  a  subject  of 
grave  concern. 

According  to  Mulhall,  real  estate  in  the  United  Kingdom  in 
1883  was  mortgaged  to  forty-one  per  cent,  of  its  value,  the 
mortgages  amounting  to  eight  billion  three  hundred  million 
dollars ;  in  France  to  seventeen  per  cent,  of  its  value ;  in  Ger- 
many to  forty-nine  per  cent,  of  its  value ;  and  in  Italy  to  thirty- 
seven  per  cent,  of  its  value.  According  to  Lord  Eeay,  the 
landed  properties  in  England  in  1883  were  mortgaged  to  fifty- 
eight  per  cent,  of  their  value.    In  Prussia  the  land  mortgages  in 


260 


THE  DISTRIBUTION  OF  WEALTH. 


1869  were  fifty-one  per  cent,  of  the  value  of  the  lands,  and  the 
house  property  in  Berlin  was  mortgaged  to  sixty-eight  per  cent, 
of  its  value.  In  Egypt  the  mortgages  registered  from  1878  to 
1883  amounted  to  thirty-two  million  dollars. 

Later  statistics  show  a  large  increase,  and  the  mortgages  of 
France  are  now  estimated  at  forty  per  cent,  of  the  value  of 
the  lands.  The  amount  is  about  four  billion  dollars.  The 
mortgages  of  Ireland  amount  to  fifty  per  cent,  of  the  value  of 
lands,  and  about  two-thirds  of  the  real  estate  of  Eussia,  Italy, 
Spain,  and  Switzerland  is  mortgaged.  Universal  competition, 
with  its  resultant  fluctuations  in  values,  has  opened  the  way  to 
an  aggregation  of  wealth  in  all  the  countries  of  Europe  that 
absorbs  the  profits  of  agriculture  and  weighs  heavily  upon  the 
middle  classes. 

All  countries  trading  together,  or  whose  labor  and  capital 
compete  in  a  common  market,  are  exposed  to  financial  convul- 
sions and  industrial  depressions  caused  by  events  and  conditions 
affecting  any  one  or  more  of  the  countries  so  united.  Industrial 
depressions  in  the  United  States  have  been  quite  contempora- 
neous with  like  depressions  in  Europe.  The  following  table, 
which  I  quote  from  the  Eeport  of  the  Commissioner  of  Labor 
of  1886,  shows  the  dates  of  industrial  depressions  and  countries 
affected. 


YEARS 

OP  DEPRESSIONS. 

Countries. 

Yeaks. 

United  States 
Great  Britain 
France  .... 

1803 
1804 

1810 
1810 

1814 
1815 
1813 

1818 
1818 
1818 

1826 
1826 
1826 

1830 
1830 

1837 
1837 
1837 
1837 
1837 

1847 
1847 
1847 
1848 

1867 
1866 
1866 
1864 

1873 
1873 
1873 
1873 
1873 

1882 
1883 
1882 
1882 
1882 

To  the  extent  that  any  of  the  leading  industries  of  the  United 
States  are  made  dependent  upon  foreign  markets,  to  that  extent 
do  our  people  impose  upon  themselves  the  risk  of  industrial 
depressions  arising  from  conditions  prevailing  in  foreign  coun- 
tries which  they  are  unable  to  control  or  prevent.  Unrestricted 
trade  means  an  industrial  copartnership  with  the  nations  of 
Europe,  by  virtue  of  which  all  the  industrial  evils  established  in 
those  countries  shall  become  factors  in  determining  the  fate 


THE  DISTRIBUTION  OF  WEALTH.  261 

of  our  own  people.     Industrial  independence,  so  far  as  natural 
conditions  will  admit,  should  be  the  aim  of  every  people. 

A    FREE-TRADE    ARGUMENT. 

Mr.  Edward  Atkinson,  in  a  recent  article,  which  he  entitles 
"  Common  Sense  and  the  Tariff  Question,"  in  the  Popular  Science 
Monthly  (September,  1890),  in  advocacy  of  the  principle  of  free 
trade,  says,  "  On  the  plea  that  this  branch  of  industry  should  be 
sustained,  the  consumers  of  iron  and  steel  in  this  country  have 
paid  a  sum  in  excess  of  the  price  paid  by  the  consumers  who 
have  been  supplied  by  Great  Britain  and  Germany,  ranging 
from  fifty  millions  to  eighty  millions  of  dollars  a  year  for  the 
last  ten  years.  The  excess  of  price  has  not  been  paid  over  to  the 
workmen  by  the  owners  of  the  mines  and  works ;  it  has  been  be- 
stowed upon  private  individuals  to  aid  private  enterprises.  One 
has  only  to  examine  the  average  wages  of  the  workmen  in  iron- 
mines  and  works  of  this  country  to  be  convinced  that  they  are 
much  less  than  the  wages  of  those  who  are  engaged  in  the  con- 
version of  crude  iron  and  steel  into  machinery,  tools,  beams, 
bars,  and  other  forms  of  use."  Mr.  Atkinson  seeks  to  show 
that,  by  reason  of  the  tariff,  manufacturers  of  iron  enjoy  ex- 
cessive  profits. 

In  1884,  Mr.  Atkinson  published  his  book  on  "The  Distribu. 
tion  of  Products,"  the  leading  purpose  of  which  appears  to  be  to 
demonstrate  that,  in  the  division  of  product  between  capital  and 
labor,  labor  receives  its  full  share.  Speaking  of  the  iron  indus- 
try, and  particularly  of  data  gathered  from  the  accounts  of  an 
Eastern  furnace,  employed  to  illustrate  the  industry  in  general, 
he  says,  "  If  we  consider  the  period  from  1860  to  1880  histori- 
cally, it  has  been  one  of  singular  progress  in  improvements  for 
converting  ores  into  iron,  both  in  the  construction  of  furnaces 
and  in  the  saving  of  labor.  To  whom  the  benefits  of  these  in- 
ventions and  improvements  have  inured  the  table  shows. 

"  Ist.  The  margin  between  the  selling  price  of  iron  and  the 
cost  of  materials  has  decreased  83^2^  per  cent.  The  share  of 
capital  has  been  reduced  both  absolutely  and  relatively. 

*'  2d.  Labor  has  been  rendered  less  arduous,  while  the  wages 
of  the  laborer  have  been  increased  37^^  per  cent.  The  share 
of  the  laborer  has  been  increased  both  absolutely  and  relatively. 


262  THE  DISTRIBUTION  OF  WEALTH. 

"3d.  The  price  of  iron  to  the  consumer  has  been  reduced 
31^^  per  cent." 

Mr.  Atkinson  follows  these  statements  with  a  graphic  table 
demonstrating  and  illustrating  the  propositions  announced  with 
a  full  array  of  figures,  and  says,  "  This  table  might  well  be 
named  *  The  indicator  of  progress  from  poverty  of  the  work- 
man, Siud  progress  towards  poverty  of  the  capitalist.'' " 

Taking  the  conditions  of  1860  to  1864,  inclusive,  and  compar- 
ing these  conditions  with  those  of  1875  to  1879,  inclusive,  Mr. 
Atkinson  illustrates,  by  means  of  a  second  graphic  table,  the 
changes  which  have  occurred  in  a  blast-furnace  used  for  the 
conversion  of  iron-ores  and  coal  into  pig-iron.  The  changes 
exhibited  are  as  follows : 

"  Product  per  head  increased  from  776  tons  to  1219  tons. 

"  Total  product  increased  from  58,959  tons  to  86,546  tons. 

"  Wages  increased  from  $353  per  year,  in  a  depreciating  cur- 
rency, to  $486  per  year  in  an  appreciating  currency. 

"  Gross  value  of  product  increased  from  $1,627,268  to 
$1,651,298. 

"  Number  of  hands  employed  decreased  from  76  to  71. 

"Price  of  iron  decreased  from  $27.95  to  $19.18  per  ton. 

"  Margin  between  the  value  of  the  product  and  the  cost  of 
materials  and  labor,  from  which  margin  taxes,  general  expenses, 
and  profits  are  to  be  derived,  depressed  from  %9.55  per  ton  to  $1.09 
per  ton." 

He  then  says,  "  It  will  be  apparent  that,  while  the  profits  of 
capital  may  have  been  much  more  than  ten  per  cent,  in  the  first 
period,  and  must  have  been  much  less  in  the  second ;  yet  such 
facts  can  seldom  be  correctly  ascertained,  and,  if  given,  would 
not  be  as  useful  as  to  assume  a  certain  unifoi^m  rate  of  profit. 
It  is  an  absolute  rule  that  if  profits  rise  above  a  certain  rate  in  any 
art  which  is  open  to  free  competition,  capital  will  be  immediately  ap- 
plied thereto  in  ample  measure  so  as  to  bring  them  down  to  an  aver- 
age at  any  given  time.  If  an  excess  of  profit  is  gained  for  any 
considerable  period,  an  excess  of  capital  will  be  invested,  and 
presently  what  is  called  an  over-production  will  occur." 

The  italics  in  the  foregoing  quotations  are  my  own. 

This  is  a  clear  case  of  stare  decisis.  Mr.  Atkinson  first  writes 
a  book,  the  product  of  painstaking  investigation,  in  which  he 


THE  DISTRIBUTION  OF  WEALTH.  263 

demonstrates  to  his  satisfaction  the  equitable  division  of  product 
between  labor  and  capital,  and  that  "  it  is  an  absolute  rule  that 
if  profits  rise  above  a  certain  rate  in  any  art  which  is  open  to 
free  competition,  capital  will  be  immediately  applied  thereto  in 
ample  measure  so  as  to  bring  them  down  to  an  average  at 
any  given  time ;"  and  the  industry  he  cites,  and  from  which  he 
obtains  his  statistics  for  his  final  and  conclusive  demonstration 
of  this  proposition,  is  the  iron  industry. 

He  now  contributes  to  a  leading  magazine  an  article  showing 
careful  preparation,  and  accompanied  by  the  usual  object-lesson 
in  the  shape  of  a  graphic  illustration,  the  purpose  of  which  is 
to  demonstrate  the  advantages  of  free  trade,  in  which  he 
assumes,  with  the  confidence  of  one  accustomed  to  speak  with 
authority,  that  the  truth  does  not  accord  with  the  statistics  or 
the  deductions  which  served  his  purpose  in  a  discussion  of  the 
relations  between  capital  and  labor,  but  that  what  he  then 
announced  as  an  absolute  rule  is  no  rule  at  all. 

The  readiness  with  which  Mr.  Atkinson  abandons  his  former 
position  in  order  to  place  himself  en  rapport  with  the  spirit  of 
free-trade  logic  indicates  no  common  aptitude  for  the  adjustment 
of  his  views  to  meet  the  requirements  of  the  argument  in  hand. 

In  other  chapters  of  this  book  I  have  endeavored  to  show 
that,  in  the  division  of  the  product  between  labor  and  capital, 
capital  obtains  an  undue  share.  I  now  desire  to  examine  the 
statement  to  which  Mr.  Atkinson  lends  his  later  endorsement 
in  the  article  above  mentioned,  in  which  he  abandons  the 
doctrine  which  he  has  hitherto  maintained. 

In  one  sense  it  is  true  that  "  the  consumers  of  iron  and  steel 
in  this  country  have  paid  a  sum  in  excess  of  the  price  paid  by 
the  consumers  who  have  been  supplied  by  Great  Britain  and 
Germany."  Whether  that  sum  reached  the  figures  named  by 
Mr.  Atkinson,  from  fifty  million  to  eighty  million  dollars  a  year, 
it  is  not  important  to  determine.  The  purpose  of  the  statement 
is,  I  presume,  to  convey  the  idea  that  by  reason  of  the  tariff  the 
iron  and  steel  consumed  by  American  consumers  during  the  last 
ten  years  has  cost  them  from  five  hundred  million  to  eight 
hundred  million  dollars  more  than  it  would  have  cost  had  there 
been  no  duty. 

If  Mr.  Atkinson's  figures  correctly  measure  the  difference  in 


264  THE  DISTRIBUTION  OP  WEALTH. 

the  cost  of  iron  and  steel  consumed  at  American  and  at  English 
prices  during  the  ten  j^ears,  and  if  we  assume  that,  had  there 
been  no  duty  and  we  had  imported  largely,  as  we  would  have 
done,  no  advance  would  have  been  made  in  European  prices ; 
that,  contrary  to  all  experiences,  an  increased  demand  for  the 
foreign  product  would  have  had  no  effect  in  raising  prices ;  and 
if  we  assume  further  that  the  export  of  agricultural  products 
could  have  been  increased  in  amount  sufficient  to  have  paid  for 
the  increase  of  importations  without  reducing  the  price  in  the 
foreign  market  of  the  bread-stuffs,  meat,  etc.,  exported,  then 
Mr.  Atkinson's  statement,  in  the  sense  in  which  he  employs  it 
in  his  argument,  would  be  apparently  true;  but  still,  in  fact, 
untrue,  for  the  reason,  as  I  have  already  shown,  that  it  takes 
at  least  three  days'  work  in  agriculture,  at  the  prices  which 
prevailed,  to  purchase  the  product  of  two  days'  work  in  man- 
ufacturing iron,  measured  by  European  prices  and  cost  of 
transportation.  It  is  altogether  a  question  of  the  exchange  of 
labor. 

It  is  true,  as  Mr.  Atkinson  and  others  contend,  that  many 
leading  manufacturing  industries  no  longer  require  the  support 
of  a  high  tariff  on  the  theory  of  encouraging  infant  industries. 
Intelligent  advocates  of  a  high  protective  duty  do  not  rest  upon 
any  such  claim.  Many  of  our  manufacturing  industries,  with 
such  reduction  in  the  price  of  labor  as  free  trade  would  bring, 
are  prepared  to  compete  in  foreign  markets,  sell  their  goods, 
and  force  in  return  the  importation  of  the  products  of  foreign 
agriculture,  or  of  foreign  manufacture,  to  compete  with  and 
cripple  other  weaker  industries,  to  the  advantage  of  many 
capitalists  engaged  in  manufacture  and  others  engaged  in  trade ; 
but  such  foreign  trade  would  be  no  advantage,  but  an  injury  to 
the  American  people  as  a  whole.  What  concerns  us  now  is  not 
an  extension  of  the  field  for  the  exploitation  of  capital,  but  a 
better  adjustment  of  industrial  forces  and  a  more  equitable  dis- 
tribution. 

The  average  wages  in  the  iron  and  steel  industries  of  the 
United  States  during  the  census  year  were  $2.59  per  day  for 
skilled  labor  and  $1.24  for  unskilled  labor.  The  average  annual 
wages  of  both  skilled  and  unskilled  labor  in  the  industries 
referred  to  by  Mr.  Atkinson  were  as  follows : 


THE  DISTRIBUTION  OF  WEALTH.  266 

Industry.  Wages. 

Anthracite  coal  mining $821.00 

Bituminous  "        "          826.00 

Iron-ore  mining 801.00 

Coke  (manufacture  of) 881.50 

Iron  rolling-mills 424.85 

Bessemer  and  Open-Hearth  Steel  Works 455.00 

Blast-furnaces 810.25 

Cutlery  and  edged  tools 472.70 

Iron  nails  and  spikes 481.80 

Iron-works,  architectural 406.40 

Iron  forgings 414.00 

Steam-fittings 878.80 

Tools 472.60 

The  low  average  annual  wages  as  compared  with  daily  wages 
results  from  the  fact  that  these  industries  were,  during  part  of 
the  year,  either  wholly  or  partly  suspended. 

Mr.  Atkinson,  in  his  statement  that  "  the  excess  of  price" 
(of  the  American  over  the  English  product)  "  has  not  been  paid 
over  to  the  workmen  by  the  owners  of  the  mines  and  works; 
it  has  been  bestowed  upon  private  individuals  to  aid  private 
enterprises,"  wholly  ignores  not  only  his  former  deductions,  but 
also  the  well-known  fact  that  the  wages  of  workmen  in  Amer- 
ican mines  and  in  the  American  iron  and  steel  industries  are 
very  much  higher  than  the  corresponding  wages  of  English 
workmen.  And  while  it  is  true  that  the  whole  amount  of  the 
excess  of  the  money  cost  of  American  iron  and  steel  has  not 
been  paid  out  in  wages,  about  two-thirds  of  it  has  been  paid  out 
in  wages  to  working-men  directly  and  indirectly  employed  in 
these  industries.  The  profits  of  capital,  not  only  in  these,  but 
in  all  American  industries,  and  on  money  loaned  or  invested  in 
trade,  have  been  greater  than  the  profits  of  capital  in  England. 
The  profits  of  capital  in  new  and  rapidly-growing  countries  are 
always  greater  than  in  old  countries  whose  industries  are 
developed  and  whose  wealth  has  accumulated  near  to  its  ap- 
proximate limit. 

It  is  true,  as  Mr.  Atkinson  says,  that  the  average  wages  of 
those  engaged  in  converting  crude  iron  into  machinery,  tools, 
and  so  on  are  higher  than  the  wages  of  those  engaged  in  mining 
and  the  manufacture  of  pig-metal,  for  the  reason  that  the  wages 


266  THE  DISTRIBUTION  OF  WEALTH. 

of  skilled  labor  are  higher  than  the  wages  of  unskilled  labor  in 
this  and  in  all  other  countries,  and  this  fact  bears  no  relation  to 
the  question  of  protection  or  free  trade. 

AN   INDUSTRIAL   BUREAU. 

Manufacturing  industries  are  among  the  most  potent  factors 
of  civilization.  They  develop  in  the  highest  degree  mechanical 
and  industrial  skill;  they  stimulate  invention  and  discovery, 
excite  mental  activity,  v^riden  the  scope  of  human  energy,  and 
bring  into  the  fullest  play  the  powers  of  the  educated  mind. 
They  at  the  same  time  furnish  to  agriculture  the  implements 
of  an  improved  husbandry,  and  make  a  market  for  the  increased 
product  of  the  farm;  they  arouse  the  people  from  the  dull 
lethargy  of  a  plodding,  uneventful  life,  create  new  opportunities, 
and  open  up  new  avenues  of  wealth. 

Combining  the  productiveness  of  skilled  labor,  aided  by  every 
ingenious  mechanical  device  that  invention  can  supply,  with  the 
powers  of  machinery  operated  by  electricity  and  steam,  they 
multiply  the  capacity  of  labor  from  ten-  to  a  hundredfold ;  and, 
as  production  is  increased,  the  wages  of  the  laborer,  which  are 
the  measure  of  his  share  of  the  product,  are  increased  in  like 
ratio  from  a  few  cents  a  day,  as  in  India  and  China,  where  pro- 
duction is  limited  to  handicraft,  to  the  highest  wages  in  the 
civilized  world,  which  are  paid  in  the  United  States,  where 
improved  implements  and  machinery  are  employed  in  agricult- 
ure and  in  all  departments  of  industry. 

Not  only  have  manufacturing  industries  increased  production 
and  advanced  wages,  but,  at  the  same  time,  they  have  extended 
the  limitations  of  wealth.  The  wealth  of  a  purely  agricultural 
people  is  measured  by  their  farms,  their  cattle,  horses,  and  im- 
plements of  husbandry,  a  temporary  supply  of  perishable  prod- 
ucts, and  the  property  employed  in  transportation  and  trade 
adequate  to  the  distribution  of  the  annual  product.  Beyond 
these  subjects  of  wealth  there  is  no  field  for  investment,  no 
room  for  growth.  But  a  nation  of  diversified  industries,  in 
addition  to  these,  has  its  mines,  its  factories,  its  furnaces  and 
mills,  an  accumulated  product  in  the  form  of  fabrics  and  the 
various  manufactures  of  wool  and  iron,  which,  being  more 
durable  than  potatoes  and  corn,  and  less  expensive  to  keep  than 


THE  DISTRIBUTION  OP  WEALTH.  267 

cattle  and  hogs,  give  storage-room  for  wealth ;  and,  in  addition 
to  these,  there  are  more  railways  and  more  of  everything  re- 
quired in  the  pursuit  of  many  industries  and  the  distribution  of 
the  larger  product.  Hence  it  is  that  manufacturing  countries 
grow  rich,  while  agricultural  countries  remain  poor.  Hence  it 
is  that  in  manufacturing  countries  wages  are  high,  while  in 
agricultural  countries  wages  are  low. 

Wealth  accumulated  is  a  power  that  controls  commerce,  de- 
termines the  conditions  of  trade,  and  commands  perpetual  trib- 
ute from  every  industry  that  competes  in  the  market  where  it 
holds  sway. 

A  people  who,  like  Africans  exchanging  ivory  for  cotton  cloth, 
or  Indians  trading  venison  for  beads,  exchange,  in  a  foreign 
market,  the  fruits  of  husbandry  or  the  products  of  handiwork 
for  the  products  of  machinery,  who  trade  the  work  of  muscle 
for  the  work  of  iron  and  steam,  build  up  a  power  beyond  their 
reach  to  control ;  while,  at  the  same  time,  they  divest  themselves 
of  the  opportunity  for  acquiring  and  storing  that  wealth  at 
home  which  is  the  source  of  a  nation's  strength  and  the  measure 
of  the  prosperity,  intelligence,  and  culture  of  a  people. 

The  relative  wealth  and  prosperity  of  England  and  Ireland 
or  India  furnish  the  only  illustration  needed  of  the  effect  of  a 
policy  limiting  the  industry  of  a  people  to  the  pursuit  of  agri- 
culture and  the  productions  of  handicraft,  and  compelling  them 
to  purchase  in  a  foreign  market  the  products  of  manufacture 
made  by  skilled  labor  with  machinery  run  by  steam  and  con- 
trolled by  capital. 

But,  on  the  other  hand,  it  will  be  said,  with  equal  truth,  that 
the  contrast  between  the  rich  and  the  poor  in  England  is  a 
measure  of  the  evils  that  spring  from  the  centralization  of 
wealth,  and  that  the  advantages  which  accrue  from  manufact- 
uring industries  are  not  distributed  among  the  people.  Yet 
the  English  working-man  is  infinitely  better  off  than  the  Irish 
peasant  or  the  Indian  ryot.  Besides,  evils  at  home,  by  means 
of  intelligent  concert  among  the  working-people,  and  by  wise 
legislation,  may  be  modified  and  corrected ;  but  the  wealth  that 
is  gathered  in  an  unequal  exchange  of  the  products  of  crude  for 
those  of  skilled  labor,  carried  away  and  piled  up  in  a  foreign 
domain,  will  not  return,  unless  in  the  form  of  credits  or  invest- 


268  THE  DISTRIBUTION   OF   WEALTH. 

ments  in  revenue-bearing  property  to  carry  abroad  the  perpetual 
tribute  of  labor  to  an  alien  people. 

In  the  United  States  not  only  will  duties  on  foreign  imports 
continue  to  be  a  principal  source  of  national  revenue,  but  the 
policy  of  so  adjusting  these  duties  as  to  foster  the  growth  of 
those  industries  which  it  is  to  our  interest  as  a  people  to  en- 
courage, and,  by  preserving  our  own  mariiet  for  the  products 
of  our  own  labor  in  those  industries  which  combine  skill  with 
the  power  of  machinery,  promote  the  conversion  of  crude  into 
skilled  labor,  thereby  increasing  its  productiveness  and  its  value, 
will  be  maintained.  Rates  of  duty,  from  time  to  time,  will  be 
readjusted  to  meet  the  requirements  of  the  demand  for  public 
revenue  and  conform  to  changing  industrial  conditions.  These 
adjustments  can  be  effected  only  by  statutes  enacted  by  the 
national  Congress,  but  framed  by  committees  who  are  appointed, 
and  who  must  complete  their  work,  during  the  sessions  in  which 
bills  reported  by  them  are  enacted  into  laws. 

Imported  articles  which  are  subjected  to  duty  under  our  sys- 
tem of  revenue  are  numerous  and  varied  in  character,  and  the 
rate  of  duty  upon  each  article  must  be  fixed,  not  only  with 
reference  to  cost  of  production,  but  also  with  reference  to  rates 
of  duty  on  related  articles.  Thus  if  the  duty  on  wool  is  ten 
cents  per  pound,  the  duty  on  manufactured  woollens,  in  the 
various  forms  of  manufacture,  must  be  so  adjusted  as  to  conform 
to  the  cost  of  wool  to  the  American  manufacturer,  or  else  foreign 
fabrics  will  crowd  the  home  product  from  the  market.  The 
same  principle  applies  to  the  iron  industry  and  all  other  in- 
dustries where  imports  are  received,  both  in  the  form  of  raw 
material  and  in  the  various  stages  of  manufacture  up  to  the 
completed  product.  The  cost  of  production,  involving  both  the 
prices  of  labor  and  the  profits  of  capital,  is  involved  in  every 
adjustment  of  the  tariff  schedule.  A  congressional  committee 
can  have  neither  the  time  nor  the  opportunity  to  secure  and 
digest  the  information  essential  to  the  making  of  a  schedule 
adapted  to  the  requirements  of  the  revenue  and  adjusted  to  the 
policy  of  protecting,  in  equal  degree,  the  various  industries 
affected  so  as  not  to  disturb  them  in  their  proper  relations,  and 
at  the  same  time  conforming  to  the  true  principles  of  taxation ; 
and  being  composed  of  individuals  of  whom  some,  at  least,  pos- 


THE  DISTRIBUTION  OP  WEALTH.  269 

Bess  little  qualification  for  the  work  of  adjusting  the  details  of  a 
tariff  schedule,  and  of  politicians  concerned  for  their  own  polit- 
ical future,  such  a  committee  is  not  always  able  to  disregard 
considerations  of  personal  interest  which  ought,  so  far  as  prac- 
ticable, to  be  removed  from  influence  on  legislation  so  directly 
affecting  the  industries  of  a  nation. 

Not  only  is  the  information  on  which  these  committees  and 
Congress  are  compelled  to  act  necessarily  incomplete  and  often 
erroneous,  but  the  people  are  not  advised  concerning  the  indus- 
trial facts  which  are  supposed  to  form  the  basis  of  tariff  rates, 
and  they  are  unable  to  judge  of  the  acts  of  their  representatives, 
or  to  hold  them  to  account. 

Errors  and  omissions  are  liable  to  occur  in  tariff  schedules, 
and  unforeseen  effects  sometimes  result  from  a  want  of  knowl- 
edge of  the  industrial  uses  of  articles  of  commerce,  or  from  not 
fully  comprehending  the  exact  meaning  of  commercial  terms, 
and  from  a  lack  of  knowledge  concerning  industrial  conditions. 

There  is  need,  therefore,  of  a  permanent  industrial  commis- 
sion which  shall  be  charged  with  the  duty  of  collecting  and 
collating  statistics  necessary  to  exhibit  fully  and  in  detail  the 
cost  of  production,  the  wages  of  labor  and  the  profits  of  capital, 
and  other  facts  the  knowledge  of  which  may  be  essential  or 
useful  in  shaping  legislation  affecting  industrial  interests  or 
social  conditions. 

Such  commission  should  have  the  power  to  examine  witnesses 
and  to  require  the  production  of  books  and  papers,  so  as  to  ob- 
tain full  disclosures  concerning  every  industry  and  trade  sharing 
the  advantages  of  the  American  market  and  enjoying  the  pro- 
tecting care  of  the  government. 

The  advantages  which  secrecy  often  affords  to  capital  as  a 
cover  for  its  operations  in  securing  an  undue  share  of  the  prod- 
ucts of  industry  are  not  advantages  which  rightly  belong  to 
any  individual  in  the  industrial  copartnership  of  a  common- 
wealth, and  the  enforced  disclosure  of  the  cost  of  production  or 
the  profits  of  trade  is  no  invasion  of  any  private  right. 

Such  commission  would  be  able  to  ascertain  and  make  clear 
many  facts  the  knowledge  of  which  is  essential  to  sound  legis- 
lation touching  industrial  relations  or  affecting  economic  condi- 
tions which  determine  the  welfare  and  shape  the  progress  of  a 


270  THE  DISTRIBUTION  OP  WEALTH. 

people.  And  the  statistics  required  cannot  be  gathered  by  the 
agencies  and  methods  now  employed ;  but  a  commission,  prop- 
erly constituted  and  clothed  with  the  necessary  authority,  would 
be  able  to  obtain  the  information  needed  in  shaping  legislation, 
and  which  might  also,  independent  of  legislation,  greatly  aid  in 
securing  and  preserving  a  well-balanced  adjustment  of  the 
various  industries,  and,  in  a  measure,  eliminate  speculation  as  a 
principal  factor  in  the  distribution  of  wealth,  and  lead  to  that 
steadiness  of  industrial  growth  which  is  the  best  guarantee  of 
reasonable  prices  and  sure  but  not  exorbitant  profits. 

The  institution  of  such  a  commission  would  meet  the  active 
opposition  of  that  class  of  persons  who  make  free  use  of  the 
word  "  paternalism"  as  a  term  fitly  characterizing  all  legislation 
designed  for  the  protection  of  the  people  from  the  industrial 
wrongs  and  commercial  frauds  which  enable  aggressive  and  not 
over-scrupulous  individuals,  in  the  name  of  "business,"  and 
without  legal  hinderance,  to  build  fortunes  for  themselves  at 
the  expense  of  others. 

The  word  "  paternalism"  is  the  English  antipodes  of  laisser  faire, 
and  those  who  are  now  opposing  the  progress  of  industrial  legis- 
lation are  the  successors  of  those  who  in  the  past  opposed,  as  an 
unwarrantable  interference  with  the  right  of  private  contract, 
those  salutary  laws  which  effected  the  reform  of  the  factory 
system  in  England,  and  whose  theory  was  tersely  epitomized  in 
the  phrase  laisser  faire.  Their  successors,  laying  less  stress  upon 
an  affirmative  declaration  of  a  somewhat  discredited  doctrine  of 
economic  science,  now  employ  the  word  "paternalism"  to  express 
their  repugnance  to  the  policy  which  has  established  itself  in 
opposition  to  their  views  and  against  their  vehement  protest. 

But,  whether  we  desire  it  or  not,  the  evident  drift  of  public 
opinion  and  the  general  trend  of  events  is  in  the  direction  of 
the  employment  of  legislative  restraints  as  a  protection  against 
industrial  wrongs ;  and  one  of  the  most  useful  as  well  as  least 
objectionable  of  legal  remedies  is  the  collection  and  publication, 
by  competent  authority,  of  social  and  industrial  statistics  which 
may  serve  as  a  basis  for  sound  theories  and  a  guide  to  safe 
action. 

Industrial  reforms  must  be  pursued  along  the  line  of  social 
progress  and  worked  out  as  a  natural  product  of  existing  tenden- 


THE  DISTRIBUTION  OF  WEALTH.  271 

cies.  Legislation  may  aid  the  process  of  evolution,  and,  as  one 
of  its  leading  factors,  in  a  great  measure  control  results.  And, 
since  changes  in  industrial  conditions  are  inevitable,  and  the  ten- 
dency in  the  direction  of  radical  legislation  in  some  form  is  every- 
where apparent,  the  establishment  of  an  industrial  bureau  would 
be  a  wise  and  conservative  measure,  by  means  of  which  public 
opinion  and  the  legislation  which  shall  proceed  from  it  may 
be  moulded  into  conformity  with  sound  principles  of  economic 
science. 

We  have  already  a  Commissioner  of  Agriculture  and  a  Com- 
missioner of  Labor.  These  two  offices  should  be  united  in  one 
department,  so  as  to  co-ordinate  their  work ;  and  such  depart- 
ment should  be  clothed  with  the  power  necessary  to  secure  a 
complete  collection  of  social,  industrial,  commercial,  and  agri- 
cultural statistics ;  and  its  duties  should  be  enlarged,  so  as  to 
embrace  the  work  of  exhibiting  the  statistics  so  collected  and 
deductions  derived  therefrom  in  convenient  form  to  serve  as  a 
guide  in  framing  or  modifying  measures  affecting  the  revenue  or 
directly  touching  social  and  industrial  relations.  The  work  of 
such  a  department  would  necessarily  be  so  conducted  as  to  be 
little  affected  by  partisan  bias,  and  the  domain  of  science  would 
be  gradually  extended  over  much  of  the  territory  now  in  dis- 
pute between  contending  political  factions.  The  organization 
of  a  bureau  of  this  character  would  lead  the  people  in  the  direc- 
tion of  scientific  investigations  and  deductions,  correct  false 
theories  based  on  defective  information  or  erroneous  suspicions, 
and  moderate  the  intensity  of  that  radical  spirit  which  feeds  on 
a  priori  reasoning  in  fields  unexplored  by  science. 

FOREIGN    IMMIGRATION. 

In  1880  the  total  foreign-born  population  of  the  United  States 
was  6,679,943,  and  the  number  of  native-born  population  of  foreign 
parentage  was  8,316,053,  making  a  total  population  that  was 
either  foreign-born  or  of  foreign  parentage  of  nearly  15,000,000, 
or  thirty  per  cent,  of  the  total  population.  The  per  cent,  of 
foreign-born  population  in  several  leading  cities  was  as  follows : 


Boston 31.8 

Cincinnati 28 

Chicago 40.6 


Detroit 89.2 

Milwaukee 39.8 

New  York 39.7 


272  THE  DISTRIBUTION  OF   WEALTH. 

The  per  cent,  of  persons  of  foreign  birth  of  the  whole  number 
of  workers  engaged  in  all  occupations  in  fifty  leading  cities  was 
forty-two  and  six-tenths ;  of  the  number  engaged  in  trade  and 
transportation,  thirty-four  and  three-tenths ;  and  of  those  en- 
gaged in  manufacturing,  mechanical,  and  mining  industries, 
forty-nine  and  three-tenths. 

Assuming  that  in  the  industries  of  these  cities  the  general 
ratio  of  native-born  persons  of  foreign  parentage  is  maintained, 
the  percentage  of  population  that  was  either  foreign-born  or  of 
foreign  parentage  would  be  as  follows : 

Boston  .    .    .  ^ 71.58 

Cincinnati 62.8 

Chicago 90.8 

Detroit 87.9 

Milwaukee 89.3 

New  York 89 

In  all  industries  in  fifty  cities 95 

In  trade  and  transportation  in  fifty  cities 76.1 

In  manufacturing,  mechanical,  and  mining  in  fifty  cities  110.6 

It  will  be  observed  that  the  percentage  so  obtained  is  impossi- 
ble as  to  "manufacturing,  mechanical,  and  mining"  industries, 
and  too  large  as  to  the  industries  combined.  We  may  therefore 
conclude  that  a  larger  percentage  of  the  children  of  foreign 
than  of  native  parents  leave  these  cities ;  also  that  the  ratio  of 
the  number  of  persons  of  foreign  birth  to  the  number  of  the 
native-born  of  foreign  parentage  engaged  in  manufacturing  and 
mining  is  greater  than  in  other  industries. 

Of  those  classified  as  of  foreign  parentage,  there  were  a 
fraction  over  one-seventh,  one  of  whose  parents  was  native- 
born. 

Since  1880  the  ratio  of  immigration  has  greatly  increased,  and 
the  ratio  of  foreign  population  in  1890  will  be  still  greater  than 
that  shown  by  the  census  of  1880. 

In  the  State  of  Massachusetts,  in  1888,  the  number  of  alien 
males  above  the  age  of  twenty-one  years  was  197,861,  of  whom 
99,131  were  unnaturalized.  The  number  of  native-born  males 
over  twenty-one  years  of  age  was  343,886,  including  those  who 
were  native-born,  but  of  foreign  parentage.  The  number  of 
foreign-born  was  36.5  per  cent,  of  the  whole. 


THE  DISTBIBUTION  OF  WEALTH.  273 

In  1880,  when  our  foreign-born  population  was  but  thirteen 
per  cent,  of  the  whole  population,  nineteen  per  cent,  of  the  con- 
victs in  our  penitentiaries  and  forty-three  per  cent,  of  the  in- 
mates of  work-houses  and  houses  of  correction  were  of  foreign 
birth. 

That  the  importation  of  an  alien  population,  many  of  whom 
are  grossly  ignorant  and  most  of  whom  are  extremely  poor, 
injuriously  aifects  our  people,  socially,  morally,  and  economically, 
there  can  be  no  question. 

The  lower  portion  of  Manhattan  Island,  on  which  stands  the 
City  of  New  York,  is  a  delta,  formed  of  the  detritus  dropped  at  the 
mouth  of  the  turbid  stream  of  foreign  immigration  that  is  steadily 
pouring  into  this  country  through  Castle  Garden.  A  large  por- 
tion of  these  people,  now  crowding  in  upon  us,  are  not  only 
without  any  true  conception  of  the  dignity  and  the  obligations 
of  American  citizenship,  but  they  are  ignorant  and  morally  de- 
praved ;  they  are  the  stunted  and  misshapen  products  of  ages 
of  degrading  servitude,  and  their  deformed  physiognomies  make 
constant  proclamation  of  mental  and  moral  defects  that  have 
acquired  the  character  and  permanence  of  inheritable  traits, 
which  it  will  require  generations  in  contact  with  more  generous 
environments  to  eradicate. 

While  it  would  not  accord  with  the  genius  of  our  institutions 
to  deny  admission  to  any  European  immigrant  whose  moral  and 
educational  attainments  are  such  as  to  bring  him  into  harmoni- 
ous and  sympathetic  accord  with  the  spirit  of  American  civiliza- 
tion, and  fit  him  for  the  duties  and  responsibilities  of  a  citizen 
of  a  free  and  progressive  republic,  we  are  under  no  moral  obli- 
gation to  degrade  any  American  industry  by  admitting  into  our 
midst  a  horde  of  ignorant,  non-progressive,  morally  degraded 
foreign  competitors,  to  divide  with  the  poorer  and  more  defence- 
less of  our  own  people  the  advantages  of  that  generous  mark-et 
for  labor,  in  the  making  of  which  the  higher  standai'd  of  living 
of  American  working-men  has  been  the  chief  factor.  We  are 
not  impelled  by  any  sentiment  of  humanity  or  by  any  patriotic 
impulse  to  destroy  the  value  of  our  free  schools — fountains  of 
learning  and  culture  which  are  the  resort  of  the  children  of  the 
whole  people — ^by  making  them  places  of  infectious  contact 
with  social  depravity,  nor  to  permit  the  current  of  social  life 

18 


274  THE   DISTKIBUTION   OF  WEALTH. 

among  the  common  people  in  this  country  to  be  converted  into 
a  lavatory,  into  which  thousands  of  ignorant  immigrants  may 
plunge  and  cleanse  themselves  from  the  gross  impurities  that 
incrust  the  lower  grades  of  human  character  in  many  sections 
of  Europe. 

Foreign  immigration  has  been  considered  only  in  its  relation 
to  the  interests  of  capitalists  looking  to  immediate  pecuniary  re- 
wards. Indiscriminate  immigration  has  been  invited  and  aided, 
in  the  interest  of  great  railway  corporations,  in  haste  to  enhance 
the  value  of  the  lands  conveyed  to  them  by  a  generous  govern- 
ment as  a  bonus  for  the  construction  of  railways ;  the  owners 
of  mines,  the  proprietors  of  furnaces  and  factories,  railway  con- 
tractors, builders,  and  other  employers  of  labor  have  encouraged 
and  often  directly  aided  the  importation  of  foreign  labor,  in 
order  that  they  might  increase  the  margin  of  profit  in  the  par- 
ticular enterprises  in  which  they  were  at  the  time  engaged, 
without  regard  to  future  results,  or  the  moral  and  economic 
effect  upon  the  nation  at  large. 

Foreign  immigration  has  an  economic  bearing  in  relation  to 
the  distribution  of  wealth  which  is  of  concern  to  the  whole 
people ;  and  it  has  also  a  moral  bearing  of  equal  concern  to 
those  whose  vision  is  not  bounded  by  the  horizon  of  dollars  and 
cents.  Our  national  policy  on  this  subject  should  be  framed  on 
a  broader  basis  than  that  of  subserviency  to  the  interests  of 
capital  in  its  struggle  to  appropriate  a  still  larger  share  of  the 
product  of  labor. 


CHAPTEE    IX. 

MONOPOLIES   AND   TRUSTS. 

Mr.  HeiJry  GrEORGE  portrays  with  great  strength  and  clear- 
ness the  condition  of  poverty  and  dependence  of  a  numerous 
class  of  working-people, — a  class  that  is  constantly  increasing, 
and  whose  condition  every  year  grows  more  and  more  hopeless. 
Looking  about  for  an  explanation  of  this  phenomenon, — for  in 
a  country  like  the  United  States,  where  wealth  is  abundant,  and 
where  the  power  of  the  people  to  produce  greatly  exceeds  their 


THE  DISTRIBUTION  OF  WEALTH.  275 

power  to  consume,  such  a  state  of  affairs  may  well  be  regarded 
as  a  phenomenon, — he  finds  the  explanation,  as  he  believes,  in 
the  monopoly  in  the  ownership  of  land.  Finding  here  what  is 
undoubtedly  one  of  the  chief  sources  of  the  evil  which  he  so 
eloquently  portrays,  he  permits  himself  to  overlook  other  co- 
operating causes  in  his  earnest  pursuit  of  the  one  to  which  his 
attention  is  mainly  directed,  and  which  he  so  vigorously  assails. 

Land  is  not  the  only  subject  of  ownership  the  quantity  of 
which  is  limited.  Every  other  species  of  property  is  also  lim- 
ited by  economic  conditions ;  and  the  amount  of  the  total  wealth 
of  a  country  is  likewise  limited. 

The  limitation  on  land  is  a  natural  limitation  on  the  quantity 
of  the  subject-matter.  As  to  other  classes  of  property,  the  lim- 
itation rests  in  economic  conditions  which  determine  the  quan- 
tity that  can  be  used.  The  limitation  is  a  limitation  on  values, 
which,  as  effectually  as  any  other,  sets  bounds  to  production. 
The  amount  of  money  (omitting  all  consideration  of  foreign 
commerce)  which  a  country  may  have,  while  not  as  definitely, 
is  as  effectually  prescribed  by  economic  conditions  as  the  quan- 
tity of  land  is  fixed  by  the  limitation  of  nature.  The  nominal 
amount  of  money  may  be  increased ;  but  beyond  the  demands 
of  trade,  while  the  number  of  dollars  or  of  pieces  may  be  mul- 
tiplied, the  total  value  cannot  be  increased.  And  the  economic 
necessity  for  preserving  a  definite  and  unchanging  standard  of 
value  makes  it  essential  that  the  volume  of  currency,  measured 
by  the  number  of  nominal  dollars,  as  well  as  the  total  value  of 
the  whole,  shall  conform  to  conditions  which  change  but  slowly. 
The  limitation  on  the  quantity  of  land  is  modified  by  the  em- 
ployment of  an  increased  amount  of  capital  and  improved  skill 
in  agriculture ;  so  that,  practically  speaking,  it  may  be  said  that 
the  limit  on  land  fluctuates  over  a  margin  as  wide  as  that  which 
covers  fluctuations  in  the  amount  of  money. 

The  necessary  limitation  on  the  number  of  railways  is  ap- 
parent ;  it  is,  however,  a  limitation  of  precisely  the  same  char- 
acter as  that  which  determines  the  number  of  factories  or  mills 
in  a  country.  The  differences  are  those  of  degree,  not  of  prin- 
ciple. The  conditions  which  give  rise  to  monopoly  in  land 
make  monopoly  possible  in  every  species  of  property.  Great 
wealth,  regardless  of  the  form  of  its  investment,  is  a  monopoly. 


276  THE   DISTRIBUTION   OF   WEALTH. 

It  will  be  seen,  therefore,  that  the  remedy  proposed  by  Mr. 
George  strikes  at  only  one  of  the  causes  of  the  evil  which  he 
seeks  to  cure.  And  if  we  are  to  apply  the  principle  of  his 
remedy  throughout,  we  must  not  only  abolish  property  in  land, 
but  all  property,  and  organize  society  on  the  communistic 
principle. 

The  causes  from  which  evils  spring  are,  however,  productive 
of  good.  We  do  not  put  out  the  fire  in  the  furnace  because  by 
fire  cities  are  consumed ;  we  do  not  abolish  steam-engines  because 
they  sometimes  explode,  nor  prohibit  railways  because  they  are 
dangerous  to  operate.  We  employ  safeguards  to  diminish  the 
evils  which  we  cannot  wholly  prevent. 

If  we  learn  by  experience  that  the  aggregation  of  a  large 
amount  of  land  in  the  ownership  of  single  individuals  is  detri- 
mental to  the  interests  of  society,  this  is  not  a  good  reason  why 
we  should  proceed  at  once  to  abolish  all  ownership.  The  rem- 
edy need  go  no  further  than  an  evil  we  seek  to  prevent  or  to 
mitigate. 

If  we  are  justified  in  preventing  one  species  of  monopoly 
from  which  society  suffers  injury,  we  are  also  justified  in  pre- 
venting every  other  species  of  monopoly  from  which  society 
suffers  harm,  provided  only  that  we  find  efficient  and  practical 
means  to  accomplish  our  purpose  without  doing  violence  to 
natural  rights  or  harm  in  other  ways  that  may  counterbalance 
the  good  we  accompKsh.  But,  in  applying  measures  of  relief, 
we  may  not  ignore  human  nature,  which  in  the  end  will  always 
assert  itself  and  render  ineffective  any  scheme  for  social  or 
economic  reform  evolved  by  abstract  reasonings  from  assump- 
tions that  run  counter  to  the  current  of  human  aspirations  and 
desires. 

Eailway  companies,  telegraph  and  telephone  companies,  gas 
companies,  and  street-railway  companies  are  classed  as  natural 
monopolies,  for  the  reason  that  they  are  not  effectively  subject  to 
control  by  means  of  competition.  They  are  therefore  considered 
as  proper  subjects  of  legislative  control.  In  behalf  of  these  insti- 
tutions, it  was  at  first  earnestly  insisted  that,  being  private  corpo- 
rations, any  attempt  by  legislation  to  regulate  their  charges  is  a 
violation  of  property  rights  and  a  pernicious  intermeddling  with 
private  affairs.    This  view  has  been  practically  abandoned ;  but 


THE  DISTRIBUTION   OF  WEALTH.  277 

the  measures  by  which  these  charges  are  to  be  finally  regulated 
have  not  yet  been  brought  to  a  high  degree  of  efficiency. 

The  policy  of  governmental  ownership  has  been  adopted  in 
Continental  Europe  and,  to  some  extent,  in  Great  Britain,  and 
appears  there  to  be  an  improvement  on  private  management. 
If  the  policy  of  public  ownership  of  natural  monopolies  be  not 
adopted  in  this  country,  their  management  and  control  will,  at 
least,  be  made  subject  to  the  supervision  of  government  officials, 
under  a  system  of  laws  which  necessity  and  experience  will 
develop.  A  long  step  has  already  been  taken  in  that  direction, 
and  further  advance  will  be  made  at  the  usual  pace  which  must 
govern  movements  of  this  character.  The  wisdom  gained  by 
experience  is  learned  but  slowly ;  and  the  problem  is  compli- 
cated by  the  fact  that  powers  which  should  be  centred  in  one 
governing  body  are  divided  between  the  general  government 
and  the  governments  of  the  respective  States,  resulting  in  a 
divided  management  of  the  same  subject-matter. 

Nevertheless,  the  policy  of  limiting  by  law  the  maximum 
charges  of  natural  monopolies  has  become  fully  established. 
The  reasonableness  of  such  charges  must  be  determined  by  some 
ascertained  standard  of  measurement.  What  shall  that  standard 
be  ?  The  only  answer  that  can  be  made  is,  a  fair  profit  on  the 
capital  invested,  after  the  pa3nnent  of  customary  wages  and 
reasonable  salaries  and  cost  of  maintaining  the  property  em- 
ployed. A  reasonable  profit  is  the  average  profit  which  may  be 
permitted  to  capital  in  general.  But  how  shall  the  amount  of 
capital  be  measured  ?  The  amount  of  stocks  and  bonds  set  afloat 
by  railway  companies  is  evidently  not  a  reliable  basis.  This 
amount  may  be,  and  often  is,  two  or  three  times  as  great  as  the 
amount  actually  invested  in  construction  and  equipment.  And 
in  many  cases,  where  it  fairly  represents  the  original  cost,  with 
improvements  added,  owing  to  depreciation  in  values  it  has 
ceased  to  be  even  a  near  approximation  to  what  would  be  the 
present  cost. 

The  value  of  the  lands  of  the  farmer  is  subject  to  depreciation 
which  results  from  unlimited  competition  ;  the  value  of  houses, 
mills,  and  machinery  is  limited  to  the  amount  which  it  would 
require  to  construct  like  machinery  or  build  like  houses,  the 
present  value  of  labor  being  the  gauge  of  value  for  all  products 


278  THE  DISTRIBUTION   OP  WEALTH. 

of  labor  which  do  not  exist  in  excess  of  the  demand ;  but,  where 
the  demand  is  exceeded,  the  value  of  property  of  this  character 
falls  below  what  would  be  the  cost  of  reproducing  it.  The 
property  of  natural  monopolies  not  being  in  like  manner  subject 
to  competition,  its  value  is  determined  by  the  rate  of  profit  it 
may  yield.  Unless  this  class  of  property  shall  be,  in  the  in- 
terest of  capitalists,  made  an  exception  to  the  operation  of  the 
general  rule  which  determines  the  value  of  other  property,  and 
the  profits  of  capital  otherwise  invested,  the  only  true  gauge  of 
the  capital  of  railway,  telegraph,  or  gas  companies,  on  which  a 
profit  should  be  permitted,  is  present  value,  as  determined  by 
what  would  be  the  present  cost  of  construction. 

It  therefore  follows  that  it  is  the  duty  of  the  government  to 
ascertain  present  values  of  property  of  this  class,  upon  the  basis 
of  present  cost ;  and  that  such  value,  when  ascertained,  should 
constitute  the  basis  of  established  charges  for  the  services  or 
the  products  of  natural  monopolies.  No  advantages  resulting 
from  the  necessary  absence  of  competition  in  any  industry  can 
legitimately  belong  to  any  individual.  Progress  in  the  direction 
of  fixing  an  equitable  basis  for  legislation  determining  maximum 
rates  of  railways  for  freight  and  passenger  carriage  has  been 
impeded  by  the  opposition  of  aggregated  wealth,  which  is 
always  a  most  potent  factor  in  shaping  legislative  action,  where 
its  interests  are  concerned. 

In  the  census  of  1880  the  total  permanent  investments  of 
railways  per  mile  is  reported  at  $59,718.  The  cost  of  construc- 
tion of  roads  is  set  down  at  $47,387  per  mile,  and  the  cost  of 
equipment  at  $4817 ;  the  value  of  lands  owned,  including  build- 
ings, at  $1191 ;  the  value  of  telegraph  lines,  etc.,  at  $2361 ;  and 
stocks  and  bonds  owned  (issued  by  other  companies)  at  $3962 
per  mile.  This  would  make  the  cost  per  mile  of  construction 
and  equipment  of  roads,  with  lands  and  buildings  used  for 
depots,  etc.,  $53,395,  which  is  double  what  would  be  the  present 
cost  of  the  same  railroads  economically  built  and  equipped, 
taking  the  right  of  way  at  the  amount  which  was  actually  paid 
for  it.  Most  of  the  railways  in  the  United  States,  through  the 
greater  part  of  the  length  of  line,  are  built  over  level  lands, 
where  the  cost  of  grading  is  light.  The  rails  now  in  track  are 
not  worth  more  than  thirty-five  hundred  dollars  per  mile,  and 


THE  DISTRIBUTION  OF  WEALTH.  279 

the  ties  from  six  hundred  to  one  thousand  dollars,  according  to 
location. 

Eailway  property  should  bo  subject  to  the  same  reductions  in 
value  as  other  property ;  for  otherwise  the  equilibrium  between 
different  interests  is  destroyed.  If  railway  property  were 
owned  by  the  government,  this  question  would  not  arise.  The 
profits  arising  from  railway  traffic  would  then  assume  the 
character  of  a  tax  to  be  expended  for  the  common  benefit. 

Owing  to  the  great  danger  to  life  and  limb  to  which  workers 
in  the  employ  of  railway  companies  are  exposed,  resulting  in 
the  creation  of  a  class  of  persons  who  have  been  by  accident  de- 
prived of  the  ability  to  support  themselves  and  families,  a  part 
of  the  revenues  denved  from  railway  traffic  ought  to  be  applied 
to  the  support  of  employes  who  have  been  crippled  in  the  ser- 
vice, or  to  the  support  of  those  naturally  dependent  upon  them. 
The  distribution  of  this  fund  might  be  regulated  according  to 
the  principles  and  methods  of  life  and  accident  insurance  com- 
panies. A  measure  of  this  character  would  be  in  accord  with 
sound  public  policy,  and  would  impose  no  hardships  on  the  peo- 
ple, whose  chief  concern  it  is  to  see  that  natural  monopolies  be 
not  made  agencies  for  the  undue  aggregation  of  wealth. 

Another  form  of  natural  monopoly  is  the  ownership  of  land. 
The  ownership  by  one  individual  of  a  certain  tract  of  land 
means  the  exclusion  of  all  others  from  any  right  or  title  to,  or 
control  of,  such  tract ;  and  the  ownership  of  a  limited  number 
of  persons  of  the  entire  area  signifies  that  other  people  must  do 
without.  Social  and  economic  conditions  do  not  permit  that 
land  be  equally  divided,  nor  that  every  man  be  the  owner  of  a 
part.  When  ownership  of  the  entire  area  is  so  widely  distrib- 
uted among  the  people  as  to  confer  no  excessive  advantages 
upon  any  one  individual,  or  class,  thus  preserving  an  approx- 
imate equality  of  opportunity  to  all,  the  conditions  conform  to 
the  demands  of  justice  and  the  practical  requirements  of  indus- 
trial prosperity  and  social  progress. 

But,  because  a  man  may  own  land,  it  by  no  means  follows 
that  he  has  the  right  to  own  all  he  may  be  able  to  acquire. 
The  right  of  the  state  to  prescribe  a  limit  to  the  ownership  of 
a  limited  gift  of  nature  is  obvious ;  and  that  public  policy  re- 
quires tlie  exercise  of  that  right,  in  order  to  prevent  the  evils 


280  THE  DISTKIBUTION  OF  WEALTH. 

which  have  grown  up  in  Europe  and  are  now  establishing  them- 
selves in  this  country,  appears  equally  clear. 

Heretofore,  in  this  country,  there  has  always  been  land  open 
to  settlement ;  but  we  are  now  rapidly  nearing  the  time  when 
the  supply  of  raw  lands  will  be  exhausted  and  all  the  desirable 
land  in  the  nation  will  be  in  the  hands  of  private  owners.  The 
demand,  which  then  can  no  longer  be  supplied  out  of  an  unap- 
propriated public  domain,  will  increase,  and  prices  will  advance ; 
and  those  who  have  had  the  misfortune  to  be  born  too  late,  of 
parents  who  have  failed  from  inability  or  neglect  to  adequately 
provide  for  their  coming,  will  find  the  task  of  securing  a  farm 
one  of  great  difficulty ;  and,  in  time,  land  will  be  wholly  beyond 
the  reach  of  the  common  laborer. 

Then  the  owner  of  land  will  have  an  obvious  advantage  over 
him  who  owns  none.  He  will  be  in  possession  of  a  kind  of 
property  for  which  the  demand  will  exceed  the  supply,  which 
labor  cannot  create,  and  which  no  human  power  can  increase. 

The  amount  of  unappropriated  public  lands  available  for 
agricultural  purposes  is  very  much  less  than  is  commonly  sup- 
posed. It  is  true  that  there  is  a  wide  expanse  of  territory 
reaching  from  the  longitude  of  Western  Kansas  to  California, 
which,  with  the  exception  of  a  few  spots,  is  unoccupied.  Owing 
to  the  want  of  sufficient  rainfall,  there  is  but  little  of  this  land 
which  is  arable  without  the  aid  of  irrigation,  and  that  which 
there  is  is  already  taken  and  in  cultivation.  Irrigation  appears 
to  be  limited  to  the  valleys  among  the  mountains,  and  those 
lands  which  are  susceptible  of  irrigation  without  great  expense 
are  practically  all  occupied.  By  means  of  expensive  dams  and 
canals  the  area  of  irrigated  land  may  be  somewhat  extended ; 
but  the  limit  of  the  annual  rainfall  is  such  as  to  forbid  a  wide 
extension  of  the  cultivated  area.  The  Missouri  Eiver,  which 
drains  a  basin  of  five  hundred  and  eighteen  thousand  square 
miles,  annually  discharges  only  about  one-tenth  more  water  than 
the  upper  Mississippi  Eiver  (from  the  Missouri  north),  which 
drains  a  basin  of  only  one  hundred  and  sixty-nine  thousand 
square  miles,  less  than  one-third  the  area  drained  by  the  Missouri, 
which  embraces  three-fourths  of  Montana,  about  two-thirds  of 
Northern  and  all  of  Southern  Dakota,  three-fourths  of  Wyoming, 
one- third  of  Colorado,  Nebraska,  part  of  Iowa,  the  northern  half 


THE  DISTRIBUTION  OF  WEALTH.  281 

of  Kansas,  and  two-thirds  of  Missouri.  In  part  of  this  territory, 
embracing  Missouri,  the  greater  part  of  Kansas  and  Nebraska, 
and  part  of  Iowa,  there  is  about  the  average  rainfall ;  from  this 
an  inference  may  be  drawn  as  to  the  remainder.  A  great  part 
of  the  lands  of  both  Northern  and  Southern  Dakota,  Western 
Nebraska,  and  Western  Kansas,  without  irrigation,  cannot  be 
profitably  employed  for  purposes  of  tillage,  and  a  very  small 
per  cent,  of  the  lands  of  Wyoming,  Idaho,  Nevada,  Arizona, 
and  New  Mexico  can  be  used  for  any  purpose  except  grazing. 
There  are  rich  valleys  in  Utah  and  Nevada ;  but  the  per  cent, 
of  arable  land  is  very  small.  The  same  is  true  of  Montana, 
Eastern  Washington,  and  Oregon.  The  truth  is,  our  valuable 
public  lands  are  gone.  What  some  new  scheme  of  irrigation 
may  accomplish  it  would  be  unsafe  to  predict,  but  I  have  little 
faith  in  any  great  addition  to  the  amount  of  arable  land  by 
means  of  irrigation. 

Mr.  Josiah  Strong,  in  "  Our  Country,"  says,  "  Driven  from  the 
plains  east  of  the  Eocky  Mountains,  the  'Great  American 
Desert'  seems  to  have  become  a  fugitive  and  a  vagabond  on  the 
face  of  the  earth."  And  it  is  true,  that  if  an  individual  travel- 
ling through  this  country  were  required  to  locate  the  "  Great 
American  Desert,"  he  would  find  little  choice  in  territory. 
Most  any  of  it  would  make  a  respectable  desert,  or  a  good 
mountain  resort.  The  American  Desert  is  a  vagabond  in  the 
great  West,  equally  at  home  wherever  he  finds  himself,  on  the 
arid  plains  between  Kansas  and  the  Rocky  Mountains ;  and  he 
appears  somewhat  familiar  with  Western  Kansas. 

Soon  the  tide  of  emigration  will  turn  backward ;  the  in- 
justice of  large  ownerships  will  then  begin  to  be  felt,  and  before 
many  years  have  passed  will  press  heavily  upon  the  common 
people.  Then  the  evil  will  be  corrected.  In  Great  Britain  land 
monopoly  stands  intrenched  behind  venerable  titles  and  caste 
distinctions.  The  people,  divested  of  power,  their  customs, 
habits  of  thought,  social  relations,  and  religious  opinions  all 
cast  in  the  mould  of  fixed  conditions,  and  developed  through 
the  course  of  many  centuries  of  a  slow-growing  civilization,  are 
slow  to  feel  the  need  of  new  conditions  unknown  to  their  ex- 
perience; and  they  move  on  in  the  ancient  grooves.  The 
American  people,  trained  to  independent  thought,  animated  by 


282  THE  DISTRIBUTION   OF  WEALTH. 

the  belief  that  the  rights  of  all  men  are  equal,  feeling  no  regard 
for  mere  class  distinctions,  their  ideas  and  habits  of  thought, 
their  aspirations  and  ambitions  developed  and  nourished  in  an 
atmosphere  of  universal  freedom,  will  never  consent  to  be 
shackled  by  conditions  which  they  know  to  be  unjust.  They 
hold  the  ballot ;  when  awakened  to  action  they  control  legisla- 
tures ;  and  when  constitutions  are  in  their  way  they  alter  them. 
But  since  a  change  must  come,  it  is  better  that  it  begin  now 
with  conservative  measures,  and  while  we  may  proceed  with 
caution.  After  a  time  the  people  may  get  in  a  hurry ;  and 
people  in  a  hurry  seldom  do  things  well. 

A  limitation  might  be  fixed  on  the  amount  of  land  one  indi- 
vidual shall  be  permitted  to  own.  I  am,  however,  of  the  opin- 
ion that  the  operation  of  well-adjusted  revenue  laws,  as  sug- 
gested in  the  chapter  on  taxation,  would  afford  the  relief  required. 
But  some  adequate  measure  should  be  adopted  now.  Large 
bodies  of  land  ought  not  to  be  held,  so  as  to  enable  the  owners 
to  speculate  out  of  the  advance  in  values  which  the  pressure  of 
events  must  soon  compel. 

ARTIFICIAL   MONOPOLIES. 

Artificial  monopolies  exist  where  an  individual,  by  means  of 
the  employment  of  great  wealth,  or  several  individuals,  by  means 
of  combination  among  themselves,  restrict  competition  in  pro- 
duction, or  in  buying  or  selling,  and  thereby  fix  prices  of  com- 
modities either  above  or  below  the  natural  standard  which  is 
determined  by  the  result  of  unrestricted  competition.  The 
number  of  natural  monopolies  is  large ;  but  their  success  in  con- 
trolling or  modifying  the  effects  of  competition  varies  according 
to  the  wealth  which  they  may  control,  or  the  thoroughness  of 
combination  which  they  are  able  to  effect. 

These  combinations  are  not  necessarily,  and  perhaps  not  gener- 
ally, made  in  the  form  of  an  express  agreement.  Where  the 
number  of  competitors  is  not  too  large,  tacit  understandings  are 
often  almost  as  effectual  as  express  agreements  to  restrain  com- 
petition. But  in  the  absence  of  an  express  agreement,  or  a 
marked  effect  on  prices,  the  term  monopoly  is  not  applied.  The 
principle  is,  however,  the  same,  whether  the  combination  be 
extensive  and  organized  on  the  basis  of  an  express  agreement 


THE  DISTRIBUTION  OP  WEALTH.  283 

or  confined  to  a  few  individuals  acting  with  some  degree  of 
concert  to  promote  a  common  object.  It  is  a  principle  which 
cannot  be  eliminated  from  business  transactions.  Hence  results 
a  diflflculty  in  the  application  of  direct  legislative  remedies. 
One  of  the  most  powerful  monopolies  ever  organized  in  this 
country  is  the  Standard  Oil  Company,  which  controls  almost 
the  entire  coal-oil  product  of  the  United  States.  In  behalf  of 
this  company  it  is  claimed  that  it  furnishes  oil  to  the  consumer 
cheaper  than  it  could  otherwise  be  furnished.  The  claim  may 
be  true ;  and  if  the  only  question  involved  was  a  question  as  to 
the  price  of  coal  oil,  this  monopoly  might  perhaps  justify  itself 
on  the  plea  of  cheap  oil.  The  question  involved,  however,  is 
one  which  relates  to  the  aggregation  of  wealth  through  an 
accumulation  of  large  profits  in  the  hands  of  a  small  number  of 
persons,  resulting  in  the  building  of  immense  fortunes  which 
absorb  the  savings  of  the  people.  While  the  people  are  being 
cajoled  with  the  assurance  of  cheap  oil,  they  are  being  bound  in 
fetters  of  iron,  which  they  may  neither  break  nor  unloose. 
They  are  entering  upon  an  everlasting  servitude  to  the  Croesus 
in  whose  doubly-locked  vaults  are  stored  the  gold  that  moves 
and  controls  a  nation's  commerce,  who  draws  to  himself  houses 
and  lands,  and  by  insidious  stealth  robs  the  nation's  poor. 

PATENT   RiaHTS. 

As  a  means  of  absorbing  and  aggregating  the  wealth  of  the 
people,  there  have  been  no  more  potent  agencies  than  patent 
rights.  The  evil  does  not  lie  in  the  mere  fact  that  the  prices 
of  patented  articles  to  the  consumer  have  been  high  j  for,  as 
measured  by  the  increased  power  of  the  new  device  or  machine 
over  the  old,  prices  have  always  been  low.  Patented  articles 
which  sell,  as  measured  by  utility  or  convenience,  are  always 
cheaper  than  those  which  they  displace,  and  it  is  for  this  reason 
that  they  supplant  them.  The  evil  lies  in  the  power  that  is 
conferred  upon  the  owner  to  aggregate  wealth. 

To  illustrate.  Suppose  that  A  has  an  entire  monopoly  on 
the  trade  in  sewing-machines,  and  that  on  each  machine  sold 
he  is  able  to  make  a  clear  profit  of  twenty  dollars.  He  sells 
two  million  machines  each  year  for  ten  years.  As  a  result, 
four  hundred  million  dollars  of  the  nation's  money  pass  into 


284  THE  DISTRIBUTION  OF  WEALTH. 

his  hands  over  and  above  what  he  pays  out  to  defray  the  cost 
of  manufacture  and  distribution.  Eating  the  interest  value 
of  capital  at  six  per  cent.,  at  the  end  of  ten  years  A  has 
accumulated  over  six  hundred  and  fifty  million  dollars.  The 
entire  amount  passes  into  his  hands  as  money.  The  money 
leaves  his  hands,  first,  in  payment  for  what  he  consumes  in  food, 
clothing,  a  residence,  personal  service,  and  so  on.  We  will  sup- 
pose that  in  this  manner  he  expends  fifty  million  dollars.  The 
remaining  six  hundred  million  he  may  either  loan  on  mortgage 
notes,  or  he  may  invest  it  in  lands,  houses,  railway  stocks,  and 
mills.  It  is  immaterial  what  form  this  vast  amount  of  accu- 
mulated capital  may  assume.  The  result  is  that  A  owns  and 
controls  six  hundred  million  dollars'  worth  of  property  used  by 
other  people,  and  for  which  those  who  use  it  pay  him  tribute. 
He  has  a  permanent  and  rapidly-growing  mortgage  upon  the 
future  labor  of  the  nation,  a  mortgage  which  can  never  be 
discharged.  For  how  can  the  people  pay  it,  so  as  to  relieve 
themselves  from  tribute?  In  money?  Money  must  not  be 
withdrawn  from  circulation;  and,  besides,  money  merely  ex- 
presses the  obligation  of  the  people  to  pay  on  demand  so  much 
of  the  products  of  labor.  Can  they  pay  it  in  foods,  clothing,  or 
personal  service?  A  and  all  the  non-producers  dependent  on 
him  for  support  can  consume  only  a  small  part  of  the  annual 
increase.  No:  A  has  possession  and  absolute  control  of  six 
hundred  million  dollars'  worth  of  the  permanent  property  of 
the  country,  in  which  alone  savings  can  be  stored,  and  the 
opportunity  of  the  people  to  save  and  accumulate  property  has 
been  diminished  in  that  amount,  and  will  continue  to  diminish 
in  the  ratio  of  the  increase  of  A's  fortune.  The  wealth  of  A 
means  the  dependence  and  the  poverty  of  B,  C,  and  D.  Wealth, 
when  it  reaches  beyond  the  property  which  the  owner  makes 
use  of,  lays  its  hands  on  that  which  must  be  used  by  other 
people ;  it  means  the  power  of  one  man  over  another. 

Grive  to  A  six  hundred  million  dollars'  worth  of  houses  and 
lands,  and  A  is  a  millionaire ;  then  give  to  every  other  man  an 
equal  amount,  and  none  are  rich.  A  could  reside  in  but  one 
house,  and  there  would  be  no  renters  to  occupy  the  others. 
His  property  would  cease  to  bring  tribute ;  it  would  cease  to  be 
power. 


THE  DISTRIBUTION  OP  WEALTH.  285 

Great  wealth  is  merely  power  centred  in  one  man  to  derive 
revenue  out  of  the  necessities  of  other  people.  Great  wealth 
cannot  exist  without  corresponding  poverty,  any  more  than  a 
king  may  exist  without  subjects,  or  a  creditor  without  a  debtor. 

It  is  beyond  the  power  of  the  people  to  pay  to  A  the  debt 
which  they  have  contracted.  They  have  bound  themselves  in 
perpetual  bondage.  Their  ears  are  bored  and  they  are  servants 
forever. 

What  is  the  remedy?  Kepeal  the  patent  laws  ?  No  :  the  in- 
ventor should  be  protected  and  recompensed.  He  should  receive 
liberal  compensation  as  a  reward  for  his  genius  and  persever- 
ance. But  he  is  not  entitled  to  the  earth.  He  is  not  entitled 
to  ride  forever  on  the  back  of  impoverished  toil.  He  invented 
a  machine  j  the  people  made  the  market. 

THE  VITAL   QUESTION. 

The  public  mind  is  often  agitated  on  the  subject  of  a  cheap 
railway  service,  as  though  it  were  merely  a  question  of  rates. 
The  important  question  always  is.  What  becomes  of  the  profits  ? 
Are  they  distributed  in  the  hands  of  a  great  number  of  con- 
sumers, or  gathered  and  stored  in  the  great  and  growing  for- 
tunes of  a  few?  When  one  man  accumulates  a  fortune  of 
millions  by  depressing  the  values  of  railway  stocks  by  ruinous 
competition,  or  skilful  bad  management,  then  by  bringing  up 
the  values  of  stocks  so  depressed  and  restoring  their  values,  or 
by  manipulations  of  the  market,  the  people  look  on  with  little 
concern.  It  is  to  them  merely  a  battle  between  the  bulls  and 
the  bears,  in  the  result  of  which  they  have  no  concern.  It  is  a 
grave  mistake.  After  a  time  the  people  will  realize  that  they 
are  weighted  with  a  burden  too  heavy  to  be  borne,  and  they 
will  cast  it  off  in  violence  and  wrath. 

The  shipment  of  cattle  to  foreign  ports  is  at  present  under  the 
control  of  a  trust  or  syndicate  of  persons  who  control  the  trade 
and  enjoy  the  profits.  If  any  one  outside  the  combination  seeks 
to  make  a  shipment,  he  finds  the  vessels  employed  in  the  trans- 
portation all  engaged. 

The  meat-trade  of  the  nation  has  become  an  overgrown 
monopoly,  with  the  power  to  move  prices  up  or  down  at  will. 
The  "  Big  Four"  stand  at  the  gate-way  of  commerce  and  exact 


286  THE  DISTRIBUTION  OP  WEALTH. 

their  toll  from  producer  and  consumer  alike.  To  what  extent 
prices  are  affected  cannot  be  told.  The  Senate  committee  now 
making  investigation  of  that  subject  will  not  be  able  to  de- 
termine. But  that  a  few  men  are  piling  up  mountains  of 
wealth  and  robbing  the  people  of  their  inheritance  we  already 
know. 

Though  the  price  of  cattle  and  hogs  to  the  producer  be  not 
lowered,  and  though  the  price  of  meat  to  the  consumer  be  not 
raised,  a  few  are  enjoying  opportunities  that  should  be  the  com- 
mon privileges  of  many,  and  building  fortunes  that  can  serve  no 
purpose  but  to  lay  the  people  under  tribute  to  themselves  and 
those  who  shall  succeed  them.  When  the  rich  grow  richer,  the 
poor  grow  poorer.  The  figures  that  stand  in  bas-relief  on  the 
face  of  the  embossed  shield  may  be  traced  in  corresponding 
depressions  on  the  other  side. 

Statesmen  should  concern  themselves  less  about  the  price  of 
pork  and  beef  and  more  about  the  absorbing  power  of  aggre- 
gated wealth.  The  profits  of  trade,  widely  distributed,  furnish 
continuing  opportunities  for  the  growth  of  those  small  accumu- 
lations of  wealth  which  make  provision  for  sickness  and  old  age 
and  dependent  children,  and  furnish  opportunities  for  the  cul- 
ture that  refines  and  purifies  social  life, — fortunes  the  incomes 
from  which  are  returned  to  the  people  again  in  exchange  for  the 
products  of  labor, — small  reservoirs  giving  out  a  steady  supply, 
emptied  and  replenished  again  from  the  ever-flowing  stream 
of  trade.  But  when  the  golden  stream  of  profit  is  poured  into 
the  Dead  Sea  of  a  millionaire's  fortune,  there  is  no  outward 
flow. 

The  number  of  persons  engaged  in  trade  and  transportation, 
aside  from  banking,  insurance,  and  newspapers,  as  shown  by 
the  census  of  1880,  was  1,700,385.  Of  these,  1,122,481  were  en- 
gaged in  trade,  and  557,904  were  employed  in  transportation. 
The  cost  of  transportation  added  to  commissions  and  the  per- 
centage of  merchants  amounts  to  about  fifty  per  cent,  of  the 
value  of  the  product  distributed.  The  number  of  persons  en- 
gaged in  transportation  is  not  in  excess  of  the  number  required 
for  this  service.  But  the  number  of  persons  engaged  in  trade  is 
much  in  excess  of  the  number  necessary. 

It  is  a  common  delusion  that  competition  always  tends  to  re- 


THE  DISTRIBUTION  OP   WEALTH.  287 

duce  prices.  In  trade  it  is  necessary  for  each  merchant  to 
obtain  a  profit  sufficient  to  pay  rents,  interest  on  capital,  cost 
of  advertising,  and  clerk  hire,  and  to  furnish  a  living  for  him- 
self and  family.  These  are  fixed  charges,  which  cannot  be 
avoided,  and  which  increase  as  trade  is  subdivided.  Therefore, 
while  the  direct  effect  of  competition  in  trade  is  to  lower  prices, 
after  a  certain  point  has  been  passed  the  tendency  is  to  main- 
tain prices  above  the  necessary  cost  of  distribution.  The  evil, 
however,  which  grows  out  of  this  tendency  is  not  of  serious 
consequence.  A  far  greater  evil  is  the  monopoly  of  trade  by 
persons  or  corporations  of  great  wealth. 

The  fierce  competition  in  trade  is  a  war  at  the  expense  of  the 
consumer,  and  from  which  the  consumer  does  not  always  derive 
sufficient  advantage  to  pay  the  cost  of  the  war.  It  is  a  com- 
petition in  which  the  strong  destroy  the  weak ;  a  competition 
in  which  cunning  schemes  and  petty  deceits  are  most  effective 
weapons. 

The  skill  of  the  mechanic  is  exercised  in  perfecting  and  add- 
ing value  to  the  product  of  his  labor.  The  skill  of  the  mer- 
chant is  employed  in  contesting  with  his  neighbor  for  a  larger 
share  of  trade.  The  skill  of  the  mechanic  creates  property ;  the 
skill  of  the  merchant  increases  his  own  share  of  profit  chiefly  at 
the  expense  of  his  competitor. 

It  is  true  that  the  people  may  be  better  served  by  an  intelli- 
gent and  competent  merchant ;  they  may  also  suffer  loss  from 
the  superior  skill  of  the  successful  merchant.  Skill  in  trade  is 
not  always  to  their  advantage.  The  skilful  angler  who  catches 
the  most  fish  is  a  more  useful  man  than  his  shrewd  companion 
who  outwits  him  in  dividing  the  string. 

The  large  accumulations  of  middle-men  are  not  always  the  re- 
wards of  a  proportionate  service  rendered  the  people,  but  are 
often  only  the  measure  of  the  ability  of  the  merchant  to  help 
himself.  The  risks  of  trade,  against  which  the  merchant  in- 
sures himself  by  large  profits  at  the  expense  of  the  consumer, 
are  often  the  results  of  manipulations  in  the  interest  of  capital. 
Speculation,  disguised  under  the  name  of  "enterprise,"  is  every- 
where, with  its  hands  in  the  pockets  of  the  people  gathering 
together  hoards  of  wealth. 

Gambling  on  boards  of  trade,  in  stocks  or  in  provisions,  is  a 


288  THE  DISTRIBUTION   OF  WEALTH. 

public  evil  loudly  condemned  by  religious  teachers  and  theoretic 
moralists  because  of  the  "  sin"  of  it.  The  sin,  however,  is  not 
ordinarily  apparent  to  laymen,  few  of  whom  would  be  restrained 
by  scruples  of  conscience  from  engaging  in  this  form  of  specula- 
tion could  they  feel  assured  of  success.  Public  opinion  on  this 
subject  is  loud-mouthed  rather  than  earnest.  The  evil  is 
respectable  and  does  not  shock  the  public  conscience. 

Speculation  enters  into  most  business  transactions,  and  is  con- 
sidered legitimate,  since  it  is  unavoidable.  It  is  not,  however, 
productive  of  good  to  society,  and  pure  speculation  unconnected 
with  the  transaction  of  legitimate  business  is  unnecessary.  It 
creates  nothing,  and  is  employed  solely  as  a  means  of  aggre- 
gating wealth.  It  is  at  war  with  a  sound  social  econom}'.  The 
evil  lies  in  the  fact  that  it  disturbs  actual  values  along  the  lines 
of  legitimate  trade ;  that  it  demoralizes  the  people  and  builds 
up  colossal  fortunes.  It  should  be  assailed  on  economic  grounds, 
as  an  enemy  of  labor,  and  suppressed  b}^  legislative  restrictions. 
It  is  a  waste  of  words  to  condemn  men  who  deal  in  futures  and 
corner  markets.  Their  conduct  may  afford  a  theme  for  the 
rhetorician,  but  it  does  not  shock  the  public  conscience.  This 
evil  cannot  be  successfully  assailed  from  the  stand-point  of 
religion  or  morality;  it  must  be  dealt  with  as  a  question  of 
economics  which  concerns  the  material  welfare  of  tiie  people. 
Trade  monopolies  might  perhaps  be  successfully  dealt  with  by 
means  of  a  progressive  tax  upon  gross  sales  above  a  certain 
amount,  or  by  the  employment  of  graded  income  taxes.  When, 
however,  the  public  is  fully  awakened  to  the  wrongs  which 
are  perpetrated  in  the  name  of  '•  business,"  and  to  the  extent 
of  the  injury  to  the  working-people,  no  great  diflSculty  will 
be  experienced  in  discovering  and  applying  adequate  rem- 
edies. 

The  people  must  learn  that  great  wealth  is  necessarily  a 
monopoly,  and  that  the  right  to  limit  the  extent  of  trade  that 
may  be  controlled  by  any  one  individual  belongs  to  the  people 
who  furnish  the  market. 

Eveiy  State  constitution  should  be  so  amended  as  to  leave  the 
power  in  the  Legislature,  restrained  by  judicious  limitations,  to 
employ  taxation  as  a  means  of  restricting  monopolies,  and  the 
growing  aggregation  of  wealth. 


THE  DISTRIBUTION  OP  WEALTH.  289 


TRUSTS. 

Trusts  are  combinations  of  capitalists  engaged  in  manufacture, 
trade,  or  transportation,  by  means  of  which  the  profits  or  prod- 
ucts of  each  are  divided  upon  some  agreed  basis,  for  the  pur- 
pose of  regulating  and  restricting  competition.  There  are  many 
combinations  entered  into  for  this  purpose,  without  any  sharing 
of  common  profits.  Sometimes  the  ^combination  effects  its  pur- 
pose by  arbitrarily  fixing  prices,  and  sometimes  by  restricting 
production.  But,  aside  from  such  combinations,  capital  engaged 
in  production  is  always  careful  to  gauge  its  product  to  the 
effective  demand. 

In  many  bmnches  of  manufacturing  industry  the  capacity  to 
produce  greatly  exceeds  the  demand.  For  instance,  during  the 
census  year  of  1880,  blast-furnaces  were  in  operation,  on  an 
average,  but  eight  months  out  of  twelve ;  and  the  steel-furnaces 
were  run,  on  an  average,  but  nine  months  during  the  year. 
During  the  year  1886,  seventy-five  per  cent,  of  the  coal-miners 
in  Illinois  were  employed  but  one-half  the  time.  The  Massa- 
chusetts census  of  1885  shows  that  the  capacity  of  the  manu- 
facturing establishments  in  that  State  was  equal  to  the  advan- 
tageous employment  of  438,229  hands;  yet  the  total  of  the 
highest  number  employed  in  each  industry,  at  times  of  the 
largest  employment,  was  but  304,159,  while  the  lowest  number 
employed  was  but  177,381;  showing  that,  during  part  of  the 
year,  the  working- force  was  curtailed  nearly  fifty  per  cent, 
below  the  number  of  highest  employment. 

In  gauging  the  number  of  its  working-force,  capital  neces- 
sarily consults  its  own  interest.  It  is  by  this  means  that  prices 
of  manufactured  goods  are  kept  steady  and  maintained  at  a 
figure  sufficient  to  yield  a  good  margin  of  profit. 

In  agriculture,  where  worker  and  capitalist  are  generally 
combined  in  the  same  person,  where  production  is  subdivided 
among  over  four  million  farmers,  no  such  power  to  regulate  the 
quantity  of  product  exists.  The  amount  of  the  product  varies 
from  year  to  year,  and  prices  fluctuate  over  a  wide  range  varying 
as  much  as  fifty  per  cent,  within  the  limit  of  two  or  three  years. 

The  manufacturer  employs  his  labor  at  stated  wages,  and 
makes  his  product  out  of  materials  which  he  purchases.    He  is 

19 


290  THE  DISTRIBUTION  OF  WEALTH. 

therefore  under  the  necessity  of  keeping  within  the  demand  of 
the  market,  at  prices  sufficient  to  cover  a  fixed  cost  of  produc- 
tion. When  the  prices  of  farm  produce  go  unexpectedly  low, 
the  farmer,  who,  relatively,  hires  but  little  labor,  deducts  the 
loss  from  his  own  wages,  which  are  not  paid  until  the  product 
is  sold,  and  are  represented  by  the  price  received. 

If,  in  manufacturing,  the  price  of  labor  and  materials  yielded 
promptly  to  a  fall  in  price  of  product,  and  consisted  merely  of 
a  certain  proportion  of  the  price  received  for  the  product,  this 
absolute  necessity  for  restricting  production  would  not  exist. 
Eut  the  manufacturer  buys  both  his  labor  and  materials  at  a 
stated  price.  They  cost  him,  on  an  average  of  the  industries, 
about  three-fifths  of  the  value  of  the  finished  product.  The 
cost  of  materials  and  labor  must  be  paid,  no  matter  what  price 
the  product  may  bring.  We  have  here  one  of  the  effects  of 
the  subdivision  of  labor  and  of  the  severance  of  the  interests 
of  capitalist  and  worker. 

This  necessity,  which  controls  manufacturing  industries,  com 
pels  a  frequent  curtailing  of  the  working-force,  and  leads  to 
frequent  suspensions. 

The  amount  of  manufactured  product  is  not  dependent  upon 
the  seasons,  or  other  like  circumstance,  that  affect  the  agricult- 
ural product ;  and  the  employer  of  capital  gauges  his  product 
according  to  the  market, — not  according  to  the  demand  at  some 
price,  but  according  to  the  demand  at  the  figure  which  he  fixes 
as  his  selling  price. 

This  power  over  production,  necessary  for  the  protection  of 
capital,  is  employed  to  maintain  or  to  advance  prices,  and  is 
subject  to  constant  abuse. 

It  is  to  the  common  interest  of  all  classes  that  labor  be  uni- 
versally and  constantly  employed,  and  that  the  total  product 
should  be  as  large  as  it  can  be  made,  or  as  large  at  least  as  can 
be  consumed.  But  it  is  important  that  labor  be  properly  dis- 
tributed and  that  production  in  each  industry  be  relatively  large. 
If  this  condition  could  be  established  and  maintained,  there 
would  be  no  occasion  for  poverty,  except  as  the  result  of  acci- 
dent, disease,  or  wilful  idleness.  But  under  the  conditions  which 
actually  prevail,  poverty  is  unavoidable ;  it  is  a  necessary  result 
of  the  present  industrial  arrangement. 


THE  DISTRIBUTION  OP  WEALTH.  291 

While  industry  in  general  is  most  prosperous  when  pro- 
duction is  greatest,  provided  there  be  at  the  same  time  an 
equilibrium  of  production  between  the  industries, — that  is,  a 
production  in  each  industry  relatively  large, — yet  any  particular 
industry,  by  restricting  its  production,  and  thereby  enhancing 
the  value  of  its  product,  may  gain  at  the  expense  of  the  other 
industries. 

Let  the  number  100  represent  the  product  of  the  cotton-goods 
industry  that  may  be  sold  for  an  amount  which  covers  a  fair 
margin  of  profit,  and  which  we  will  also  designate  as  100.  Now, 
if  this  total  product  be  reduced  to  90,  the  price  of  cotton  goods 
will  advance,  the  supply  having  fallen  below  the  demand  at  the 
old  price.  A  product  of  90  will  not  only  bring  a  higher  price, 
but  the  total  value  may  be  more  than  that  of  a  product  of 
100.  But  if  the  product  be  increased  to  110,  the  price  will  fall, 
and  the  total  value  of  the  whole  may  be  less  than  100.  Thus 
the  margin  of  profit  may  be  increased  by  restricting  production. 
What  is  true  of  one  industry  is  true  of  every  other  industry. 
The  principle  here  illustrated  is  well  understood. 

There  is,  therefore,  at  all  times,  independent  of  express  com- 
binations, a  strong  tendency  towards  the  restriction  of  the  prod- 
uct. The  manufacturer  of  cotton  goods  is  on  the  alert  to 
maintain  prices  and  to  prevent  the  market  from  being  over- 
stocked. He  employs  only  the  labor  required  to  meet  the 
demand  at  certain  prices ;  the  manufacturer  of  woollen  goods 
does  the  same.  If  the  demand  weakens,  he  reduces  his  working- 
force.  Men  out  of  employment  must  limit  their  consumption  ; 
consumption  being  reduced,  weakens  the  demand.  Thus,  as 
production  is  restricted  at  all  points,  the  demand  is  likewise 
restricted,  and  the  contest  between  capitalists,  to  preserve  the 
margin  of  profit,  has  the  eifect  to  reduce  the  demand  for  their 
product.  The  workers  who  are  thrown  out  of  employment, 
crowded  out  of  the  circle  of  production  and  distribution,  are 
kept  out,  because  there  is  no  demand  for  more  product;  and 
there  is  no  demand  for  more  product  for  the  reason  that  labor  is 
unemployed  and  unable  to  supply  its  wants. 

Formerly,  when  the  amount  of  capital  required  to  make  labor 
available  was  small,  and  most  workers  were  their  own  employers, 
creating  their  product  and  getting  their  wages  out  of  the  price 


292  THE  DISTRIBUTION  OF   WEALTH. 

that  product  brought  in  the  market,  the  present  condition  was 
not  possible.  Labor  distributed  itself  through  the  several  in- 
dustries according  to  a  demand  which  was  steady  and  subject 
to  only  slight  vacillations ;  and  the  product  of  one  industry  was 
not  liable  to  a  sudden  increase  out  of  proportion  to  the  products 
of  other  industries.  The  employment  of  machinery  run  by 
steam,  combined  with  the  use  of  large  amounts  of  capital  in 
single  establishments,  has  brought  about  a  condition  leading  to 
frequent  disturbance  of  the  equilibrium  of  the  industries,  and 
making  the  worker  dependent  upon  the  interests  of  aggregated 
wealth  which  now  controls  production. 

The  worker  can  no  longer  employ  himself.  He  must  find  an 
employer  or  lie  idle.  The  interests  of  the  employer  compel  him 
to  limit  his  production  ;  and,  in  the  contest  to  maintain  prices, 
large  numbers  of  working-men  are  kept  out  of  employment. 
The  less  competent  are  the  ones  who  suffer  most;  and  since, 
relatively,  there  must  always  be  a  weaker  class,  that  class  must 
bear  the  principal  burden  of  competition,  and  many  are  con- 
tinually pressed  to  the  extremes  of  poverty.  One  individual 
may  rise  above  his  class ;  but  some  other  person  is  crowded  into 
the  place  he  leaves  vacant.  As  a  class,  the  poor  are  powerless 
to  extricate  themselves  from  the  condition  made  for  them  by 
agencies  over  which  they  have  no  control.  They  are  a  product 
of  our  industrial  civilization.  They  are  the  victims  of  a  fate 
from  which  they  cannot  escape.  Paupers  are  the  industrial 
correlatives  of  millionaires. 

The  prevention  of  trusts  and  combinations,  it  will  be  seen, 
while  it  may  remedy,  cannot  eradicate  the  evil.  The  problem 
is  one  of  extreme  difficulty,  requiring  time  for  solution.  But 
when  the  theory  that  capital  can  do  no  wrong,  and  that  all 
competition  is  legitimate,  is  abandoned,  and  the  idea  of  pro- 
raoting  the  welfare  of  the  working-people  takes  control  of 
legislation,  the  way  will  be  opened ;  there  will  be  light  enough 
to  mark  the  pathway  to  each  advancing  step.  What  is  most 
needed  now  is  a  clear  understanding  of  the  causes  of  existing 
evils.  If,  in  addition  to  remedies  of  a  general  character,  sug- 
gested elsewhere,  more  special  legislation  be  required,  no  insur- 
mountable obstacle  will  be  met  with.  The  principal  obstruction 
that  stands  in  the  way  of  remedial  measures  is  the  lack  of 


THE  DISTRIBUTION  OP  WEALTH.  293 

knowledge  among  working-men  of  the  causes  of  industrial 
evils. 

The  doctrine  that  "  whatever  is  is  right,"  so  persistently  main- 
tained by  writers  on  economic  science,  has  been  generally  ac- 
quiesced in,  if  not  sanctioned ;  but  working-people  must  learn 
that  labor  and  capital  have  interests  that  conflict  as  well  as 
interests  in  common,  and  that  legislation  whose  policy  is  shaped 
by  representatives  of  aggregated  wealth  alone  is  not  always 
best  adapted  to  promote  the  welfare  of  the  people. 

The  conditions  of  industrial  oppression  which  prevail  in  all 
old  countries,  where,  with  great  wealth  in  the  hands  of  a  com- 
paratively small  number,  the  masses  are  deprived  of  all  oppor- 
tunity to  gain  a  competence,  and  many  are  unable  to  obtain  the 
ordinary  comforts  of  life,  is  proof  enough  that  the  wheels  of 
evolution  need  to  be  lifted  out  of  the  old  ruts. 


CHAPTEE    X. 

WHAT   MAKES   THE   RATE   OP   WAGES. 

Writers  on  political  science  have  devoted  considerable  space 
to  abstract  reasonings  regarding  the  "  law"  of  wages,  in  search 
of  a  definite  and  concise  formula  for  the  expression  of  that  law, 
with  the  result  that  cheap  generalizations,  arrayed  in  the  uni- 
form of  so-called  scientific  thought,  have  been  successfully 
paraded  as  "  laws"  of  economic  science. 

Of  this  order  is  the  wage-fund  theory,  until  recently  quite 
generally  accepted  and  adopted  by  even  as  profound  a  writer  as 
John  Stuart  Mill.  The  theory  is  that  wages  are  paid  out  of  a 
ijertain  limited  fund,  which  consists  of  the  amount  of  capital 
/which,  at  any  one  time,  may  be  devoted  to  the  purchase  of  labor ; 
/  and  that  therefore  the  rate  of  wages  depends  upon  the  ratio  of 
[  the  number  of  workers  to  the  amount  of  capital  devoted  to 
their  payment.  Mill  says,  "  Wages  depend,  then,  on  the  propor- 
tion between  the  number  of  the  laboring  population  and  the 
capital  or  other  funds  devoted  to  the  purchase  of  labor ;"  and 
again,  "  Since,  therefore,  the  rate  of  wages  which  results  from 


294  THE  DISTRIBUTION   OP  WEALTH. 

competition  distributes  the  whole  wage-fund  among  the  whole 
laboring  population,  if  law  or  opinion  succeeds  in  fixing  wages 
above  this  rate,  some  laborers  are  kept  out  of  employment ;  and, 
as  it  is  not  the  intention  of  the  philanthropists  that  these  should 
starve,  they  must  be  provided  for  by  a  forced  increase  of  the 
wage-fund  by  compulsory  saving." 

This  theory  has  been  exposed  to  elaborate  analysis  by  differ- 
ent writers,  who  have  made  plain  its  fallacy.  It  has  ceased  to 
be  of  interest  except  as  a  part  of  the  history  of  the  growth  of 
the  science  of  political  economy.  It  is  difficult,  however,  to  com- 
prehend how  an  able  student  and  author  like  Mill  could  fall 
into  an  error  so  transparent. 

Eicardo,  speaking  on  the  subject  of  wages,  says,  "The  nat- 
ural price  of  labor  depends  on  the  price  of  food,  necessaries, 
and  the  conveniences  required  for  the  support  of  the  laborer;  so 
that  with  a  rise  in  the  price  of  food  and  necessaries  the  price 
of  labor  will  rise,  and  with  a  fall  in  the  price  the  natural  price 
of  labor  will  fall." 

Dr.  Wayland  says,  "  By  free  competition  wages  are  adjusted 
to  the  ratio  between  the  amount  of  capital  seeking  labor  and 
the  number  of  laborers  seeking  employment;  competition  it- 
self being  modified  by  some  regard  to  the  cost  of  living,  the 
productiveness  of  industry,  established  custom,  and  the  prompt- 
ings of  good- will  between  man  and  man."  Speaking  of  demands 
of  workers  for  higher  wages,  he  says,  "A  claim  is  reasonable 
when  the  necessities  of  the  laboret-s  require,  and  the  actual 
profits  of  the  industry  permit,  the  increase  of  wages  or  what  of 
better  terms  is  insisted  on." 

It  will  be  observed  that  the  theory  here  advanced  is  that  the 
worker  is  not  entitled  to  anything  beyond  what  his  necessities 
require.  A  claim  to  that  much  is  reasonable,  when  the  profits 
of  the  industry  are  sufficient  to  justify  it.  The  claims  of  the 
horse  to  his  keep,  and  the  working-man  to  his  subsistence,  it 
will  be  seen,  are,  in  the  eyes  of  political  economists,  defined 
according  to  the  same  rule. 

Professor  Walker,  who  rejects  the  wage-fund  theory,  and 
recognizes  the  obvious  fact  that  wages  are  a  portion  of  the 
product  created  by  labor  by  which  the  wages  are  said  to  be 
earned,  seeks  to  define  a  rule  or  law  by  which  the  proportionate 


THE  DISTRIBUTION  OP  WEALTH.  295 

amount  duo  to  labor  and  the  proportionate  amount  due  to  capi- 
tal may  be  determined.  He  makes  a  new  application  of  Kicardo's 
law  of  rent,  and  constructs  a  sort  of  metaphysical  mitre-box,  by 
the  aid  of  which  the  total  product  may  bo  cut  in  two  at  the 
right  place  and  at  the  proper  angle. 

Eicardo's  law  of  rent  appears  to  be  a  formula  devised  as  a 
justification  of  the  rapacity  of  landlords.  Concisely  stated 
it  is:  "The  rent  of  land  is  determined  by  the  excess  of  its 
produce  over  that  which  the  same  application  can  secure  from 
the  least  productive  land  in  use."  Assuming  that,  from  the 
effect  of  competition,  wages,  as  well  as  profits  on  capital,  are 
necessarily  reduced  to  the  same  level,  this  rent  theory  would  be 
true.  It  is,  however,  only  approximately  true  ;  and  as  a  rule 
of  practical  application  it  is  misleading.  Take,  for  instance, 
agricultural  lands.  Here  is  one  section  of  country  where  the 
lands  are  poor  and  unproductive.  Such  lands  may  be  occupied 
in  large  bodies  for  grazing  purposes,  deficiency  in  quality  being 
made  up  in  quantity.  But  we  will  suppose  that  portions  of 
this  poor  land  are  used  for  tillage,  and  occupied  by  poor  people 
who  obtain  a  mean  and  precarious  subsistence  ;  near  by  may  be 
fertile  lands  many  times  as  productive.  According  to  the 
theory  of  Eicardo,  the  renter  of  the  fertile  land,  after  paying 
his  rent,  would  have  nothing  left  above  the  mean  subsistence  of 
the  people  on  the  poor  lands  near  by.  Yet  every  person  of 
observation  knows  that  tenants  or  renters  on  the  most  produc- 
tive land  fare  much  better 'than  those  on  poor  lands.  If  the 
theory  were  true  as  a  practical  rule  of  action,  an  individual 
about  to  rent  a  farm  would  need  feel  little  concern  about  the 
fertility  of  the  soil,  since  all  above  a  certain  stated  amount 
would  belong  to  the  landlord.  The  average  reward  of  agri- 
cultural  workers  varies  greatly,  within  the  limits  of  short  dis- 
tances. In  one  part  of  a  country  lands  will  be  quite  thoroughly 
cultivated,  which  will  not  yield  one-half  the  reward  to  labor 
that  is  enjoyed  by  renters  in  other  sections  of  the  country. 
People  adapt  themselves  to  surrounding  conditions,  among 
which  is  the  measure  of  the  soil's  fertility.  In  the  same  neigh- 
borhood, the  better  tenant  gets  the  best  lands ;  and,  while  it  is 
true  that  there  always  is  a  strong  pressure  forcing  the  wages  of 
labor  of  any  class  to  the  level  of  the  demands  of  the  most  im- 


296  THE  DISTRIBUTION   OF   WEALTH. 

poverished  members  of  that  class,  there  is  also  a  strong  counter- 
tendency.  But  this  theory  of  rent  approximates  the  truth  so 
nearly  that  it  should  be  regarded  as  a  most  sufficient  reason  for 
the  adoption  of  such  policy  of  legislation  as  will  tend  to  the 
abolition  of  landlordism.  The  use  which  political  economists 
are  accustomed  to  make  of  Eicardo's  law  of  rent  is  to  demon- 
strate the  fitness  of  things  as  they  now  exist. 

Professor  Walker's  theory  of  wages  and  profits  is  that,  in  a 
state  of  perfect  competition,  the  profits  of  the  manufacturer  are 
not  deducted  from  the  wages  of  the  mechanic,  any  more  than 
rent  is  obtained  through  a  deduction  from  the  prices  of  agri- 
cultural labor.  He  holds  that  profits  are  measured  from  the 
level  of  those  employers  who  receive  no  profit,  as  rents  are  / 
measured  from  the  limit  of  the  product  of  those  lands  which  / 
yield  no  profit,  and  embrace  the  whole  excess  of  the  product  of 
the  more  valuable  lands  over  the  product  of  the  poorest  lands 
in  cultivation ;  so  he  holds  that  profits  embrace  that  excess  of 
product,  created  by  the  exceptional  skill  or  opportunities  of  em- 
ployers, over  the  amount  of  product  which  is  created  with  the 
same  amount  of  labor,  by  that  class  of  employers  who  are  able 
to  produce  nothing  beyond  the  amount  required  to  pay  wages, 
or  who,  in  other  words,  make  no  profit. 

To  illustrate :  The  demand  for  woollen  fabrics  is  of  a  certain 
degree  of  intensity.  To  supply  this  demand  industry  is  organ- 
ized, under  the  requisite  number  of  employers  of  labor,  and 
capital,  or  entrepreneurs,  as  Professor  Walker  terms  them,  who 
will  naturally  be  of  different  degrees  of  capacity ;  those  of  the 
lowest  capacity  will  be  able  to  make  no  profits  at  all,  or  at  most 
a  meagre  living  for  themselves  and  families,  amounting  only  to 
a  moderate  compensation  for  their  work  as  managers.  As  the 
demand  may  increase,  and  thereby  push  prices  of  the  product 
upward,  still  other  and  lower  grades  of  entrepreneurs  will  be 
brought  into  the  field  of  production,  until  the  no-profit  line  is 
again  reached  by  the  lowest  grade  of  entrepreneurs.  Since  the 
same  wages  must  be  paid  by  all  employers,  the  part  of  the  prod- 
uct that  remains,  after  paying  wages  of  the  workers  and  cost 
of  maintaining  capital,  will  represent  profits ;  and  the  quantity 
of  this  product  that  remains  to  the  credit  of  profit,  under  the 
management  of  the  most  skilful  entrepreneur^  will  be  measured 


THE  DISTRIBUTION  OF  WEALTH.  297 

by  the  excess  of  product,  under  his  management,  over  the 
amount  of  product  created  by  the  least  skilful  entrepreneur  who 
makes  no  profit ;  in  short,  the  profit  of  each  entrepreneur  will, 
like  any  other  quantity,  be  measured  by  its  excess  over  nothing, 
— ten  is  ten  more  than  nothing.  It  will  be  seen  that  Professor 
Walker's  reasoning  is  verified  by  the  result,  which  corresponds 
with  a  most  familiar  principle  of  elementary  mathematics. 

But,  to  permit  him  to  explain  his  own  theory :  "  The  price  of 
manufactured  goods  of  any  particular  description  is  determined 
by  the  cost  of  production  of  that  portion  of  the  supply  which, 
is  produced  at  the  greatest  disadvantage.  If  the  demand  foi 
such  goods  is  so  great  as  to  require  a  certain  amount  to  be  pro. 
duced  under  the  management  and  control  of  persons  whose 
efficiency  in  organizing  and  supervising  the  forces  of  labor  and 
capital  is  small,  the  cost  of  production  of  that  portion  of  the 
stock  will  be  large,  and  the  price  will  be  correspondingly  high ; 
yet,  high  as  it  is,  it  will  not  be  high  enough  to  yield  to  the  en- 
trepreneurs of  this  grade  any  more  than  that  scant  and  difficult 
subsistence  which  we  have  taken  as  the  no-profit  line.  The 
price  at  which  these  goods  are  to  be  sold,  however,  will  deter- 
mine the  price  of  the  whole  supply,  since,  in  any  one  market,  at 
any  one  time,  there  is  but  one  price  for  different  portions  of  the 
same  commodity.  Hence,  whatever  the  cost  of  those  portions 
of  the  supply  which  are  produced  by  entrepreneurs  of  higher  in- 
dustrial grade,  they  will  command  the  same  price  as  those  por- 
tions which  are  produced  at  the  greatest  disadvantage.  The 
difference  so  measured  will  go  as  profits  to  each  individual 
entrepreneur,  according  to  his  own  success  in  production,  whether 
that  be  due  to  exceptional  abilities  or  to  exceptional  opportuni- 
ties, or  to  both  in  one  proportion  or  another." 

Professor  Walker,  therefore,  concludes  that  profits  do  not 
come  out  of  wages.  The  no-profit  employers  must  pay  sufficient 
to  hire  laborers,  and  the  wages  of  these  laborers  constitute  an 
essential  part  of  the  cost  of  production.  The  entrepreneurs  of 
the  higher  grades  will  pay  the  same  wages, — "  they  will  clearly 
pay  no  less,  they  need  pay  no  more." 

This  is  a  somewhat  circuitous  statement  of  the  industrial  fact 
that,  whatever  remains  to  the  employer,  after  paying  the  wages 
of  his  employes  at  the  customary  rates,  may  be  set  apart  as 


298  THE  DISTRIBUTION  OP  WEAIiTH. 

profit.  And  if  by  reason  of  superior  skill,  or  because  of  ex- 
ceptional opportunity,  this  remainder  be  large,  his  profit  will  be 
large ;  if  small,  his  profit  will  be  small.  The  amount  of  his  profit 
depends  on  competition.  If  there  be  numerous  competitors 
possessing  a  high  degree  of  skill,  and  equal  opportunities,  the 
profit  will  be  less ;  if  he  be  without  competition,  he  may  advance 
his  prices  and  his  profit  will  be  large. 

I  admit  that  the  relative  profits  of  different  entrepreneurs  are 
measured  in  accordance  with  the  theory  here  advanced ;  in 
short,  the  ratio  of  profits  is  determined  by  the  ratio  of  capacity 
and  opportunity.  Yet  I  am  unable  to  perceive  in  this  elab- 
orately-stated theory  a  solution  of  any  practical  question  in 
economic  science.  It  does  not  therefore  follow,  as  claimed,  that 
the  working-man  has  no  cause  for  complaint.  The  fact  is  not, 
as  assumed,  that  profits  are  the  measure  of  skill  in  production. 
The  larger  profits  are  to  be  accounted  for  in  many  ways.  There 
are,  first,  the  advantages  of  large  aggregations  of  capital,  by 
which  a  larger  volume  of  business  is  controlled  in  proportion  to 
the  expense  of  management  and  cost  of  distribution.  Second, 
there  are  the  advantages  of  established  trade  which  enable  a 
manufacturer  to  shape  his  product  to  the  requirements  of 
known  demands,  and  dispose  of  his  goods  with  little  delay  and 
at  fair  prices,  and  at  the  minimum  cost  of  getting  such  goods  on 
the  market.  This  is  not  skill  in  production,  but  the  skill  of  the 
merchant  in  promoting  his  individual  interests.  Third,  there 
are  the  advantages  which,  as  suggested  by  Mr.  Carnegie,  are 
not  the  least,  "  of  those  economies  which  are  exercised  by  the 
employer  in  the  rate  of  wages  paid  to  labor."  Large  profits  are 
the  result,  in  great  degree,  of  economy  in  getting  the  best 
labor  for  the  particular  work  done  at  the  lowest  prices,  and  in 
getting  the  largest  amount  of  work  for  the  smallest  pay. 

The  rate  of  wages  in  two  factories  may  be  the  same ;  but 
the  skill  of  employes  in  the  one  is  often  of  a  higher  order, 
work  is  pushed  with  greater  energy,  and  less  time  is  lost  by  the 
workers. 

There  is  no  lack  of  competent  managers  who  may  be  brought 
into  the  field.  And  it  is  not  true  that  the  degree  of  competence 
of  the  most  unsuccessful  entrepreneurs  is  a  measure  of  the  de- 
mand for  the  product.     There  will  always  be  some  managers 


THE  DISTRIBUTION  OP  WEALTH.  299 

who  make  little  or  no  profit,  or  who  even  lose  the  capital  in- 
vested, continuing  in  business  for  a  time,  until  their  competency 
is  tested,  and  until  competent  persons  may  be  found  and  selected 
to  take  their  places.  In  the  adjustment  of  men  to  their  proper 
positions  in  the  industries  it  must  be  that  there  will  bo  those 
who  for  a  time  occupy  positions  they  are  not  competent  to  fill. 

For  the  purpose  of  a  starting-point  Dr.  Walker  locates  an 
entrepreneur  at  the  no-profit  .line,  on  the  theory  that  a  manager 
of  the  assumed  grade  is  put  in  such  position  by  force  of  the 
demand  and  from  necessity,  there  being  a  lack  of  efficient  man- 
agers ;  whereas,  in  fact,  the  no-profit  manager  in  charge  of  any 
considerable  amount  of  capital  and  labor  is  only  a  temporary 
accident;  but  he  is  able  to  hold  his  position  longer  than  he 
otherwise  might  by  reason  of  low  wages,  which  are  in  part  the 
result  of  the  "  economies"  of  the  skilful  entrepreneur  in  securing 
labor  without  equitable  compensation. 

It  is  not  true  that  "  the  price  of  manufactured  goods  of  any 
particular  description  is  determined  by  the  cost  of  production 
of  that  portion  of  the  supply  which  is  produced  at  the  greatest 
disadvantage."  The  price  of  any  product  is  the  resultant  effect 
of  many  economic  forces.  The  total  amount  of  the  supply,  as 
measured  against  the  demand,  is  the  most  potent  factor  oper- 
ating directly  in  determining  prices.  To  say  that  any  particular 
part  of  a  total  product  determines  the  price  of  the  whole  is  to 
mistake  the  fact  of  a  correspondence  between  price  and  amount 
of  wages  paid  for  a  cause.  In  a  business,  where  some  must  fail 
while  others  succeed,  there  will  always  be  a  point  somewhere 
along  the  line  where  the  amount  of  wages  paid  in  production 
corresponds  with  the  commercial  value  of  the  product. 

The  position  of  Dr.  Walker  appears  to  be  this :  If  there  be 
found  an  entrepreneur  running  a  woollen-mill  over  in  Connec- 
ticut, who  takes  advantage  of  women  and  children  by  paying 
them  but  a  niggardly  pittance  for  their  labor,  and  who  practises 
various  other  mean  economies  to  the  disadvantage  of  his  em- 
ployes, who  yet,  being  a  stupid  fellow,  succeeds  merely  in 
making  a  subsistence  for  himself  and  family,  then  every  mana- 
ger of  a  woollen-mill  in  the  whole  country  is  justified  in  paying 
his  employes  the  same  rate  of  wages,  and  subjecting  them  to 
the  same  mean  exactions,  ^nd  pocketing  the  profits,  no  matter 


300  THE  DISTKIBUnON  OF  WEALTH. 

how  large  they  may  be ;  and  working-people  have  no  right  to 
complain;  for,  says  Dr.  Walker,  "Why,  in  equity  or  in  eco- 
nomics, should  a  laborer  who  works  for  a  strong,  prudent,  and 
skilful  master  receive  higher  wages  than  one  whose  fortune 
it  is  to  work  for  a  vacillating,  purblind,  inefficient,  or  reckless 
entrepreneur  f 

In  short,  if  there  be  one  miserable  ruffian  in  town  who  kicks 
his  dog,  every  good  citizen  is  justified  in  administering  to  his 
own  dog  the  same  rude  treatment,  since  one  dog  has  no  right  to 
greater  consideration  than  any  other  dog. 

A  more  pitiful  exhibition  of  that  heartless  indifference  to  the 
interests  of  the  working-people,  which  pei'vades  the  theories  of 
political  economists  who  hold  it  their  mission  to  defend  the  ex- 
isting order,  will  not  be  found  in  any  treatise  on  economic  science. 

Mr.  Attgeld,  in  "  Live  Questions,"  speaking  of  the  wages  of 
women  and  girls  in  certain  manufacturing  establishments  in  the 
city  of  Chicago,  says,  "  They  are  at  starvation's  edge,  and  they 
never  get  below  that  in  Europe.  For  example,  two,  three,  and 
four  dollars  per  week,  and  board  oneself,  for  ten  hours'  toil  a 
day.  So,  the  wages  paid  in  the  cigar  manufactories  and  other 
establishments  of  the  East,  as  shown  by  congressional  investi- 
gation now  in  progress,  are  below  what  is  possible  for  an 
American  to  live  on.  ...  It  is  almost  the  lowest  European 
standard.  Establishments  that  used  to  pay  ten  dollars  a  week 
to  American  laborers  now  pay  three  or  four  dollars  to  imported 
Europeans  for  doing  the  same  work.  It  is  true  that  all  estab- 
lishments do  not  employ  imported  laborers,  but  enough  do  to  fix 
the  standard  of  wages.  If  only  a  few  establishments  in  the 
same  line  get  their  work  done  for  four  dollars  a  week  by 
foreigners,  this  will  become  the  standard  all  along  the  line,  even 
in  houses  employing  Americans,  for  the  latter  cannot  pay  ten 
dollars  and  compete  with  the  former ;  and  as  it  has  been  shown 
that  there  is  scarcely  a  line  of  industry  in  which  these  imported 
laborers  have  not  been  introduced,  it  follows  that  the  standard 
of  wages  has  been  largely  fixed  by  what  these  imported  people 
will  work  for. 

"  For  years  we  have  heard  of  the  Italians,  Poles,  Hungarians, 
etc.,  who  were  imported  constantly  into  Pennsylvania,  and  in 
many  cases  where  these  people  refused  to  submit  to  further 


THE  DISTRIBUTION  OF  WEALTH.  301 

reduction  of  wages  they  wore  simply  discharged,  and  their 
places  filled  with  fresh  importations.  So  that  now  Mr.  Pow- 
derly  claims  that  almost  all  American  citizens,  both  native-born 
and  naturalized,  have  been  driven  out  of  the  mines  and  manu- 
facturing establishments  of  that  great  State." 

We  see  here,  as  an  evident  effect  of  the  ignorance,  poverty, 
and  dependence,  and  an  established  habit  of  mean  living,  of 
a  class  of  laborers,  a  low  rate  of  wages,  not  to  themselves  only, 
but  to  other  laborers  who  oome  in  competition  with  them. 

It  is  to  such  conditions  that  Professor  Walker  would  have 
the  American  working-man  resign  himself,  as  to  a  decree  of 
providence ;  because  he  is  able  to  make  it  clear,  by  the  applica- 
tion of  a  logical  formula,  that  such  must  be  the  result  of  unre- 
strained competition. 

The  fixing  of  the  wages  of  an  individual  worker,  or  of  a  class 
of  workers,  is  a  part  of  the  complex  general  adjustment  of  the 
wages  of  all  classes  of  workers  in  the  various  industries  by  which 
are  produced  all  the  commodities  exchanged  in  the  common 
market.  The  wages  of  a  class,  or  of  an  individual  even,  can- 
not be  changed  without  affecting  the  adjustment  of  the  whole. 
Wages,  though  first  paid  in  money,  are  finally  and  truly  paid  in 
commodities  or  products.  For  this  reason  wages  are  not  readily 
changed,  except  within  the  narrow  limits  allowed  by  those  oscil- 
lations which  disturb  values,  and  which  are  occasioned  by  varia- 
tions in  the  supply  of  natural  products,  fashion,  and  temporary 
over-  or  under-production  of  particular  commodities. 

Wages,  therefore,  may  not  be  arbitrarily  fixed  by  the  con- 
tracting parties.  But  wages  in  a  particular  industry  may  be 
slowly  and  gradually  pushed  up  or  down,  and  related  conditions 
and  values  will  adjust  themselves  accordingly. 

To  illustrate.  Let  the  total  product  of  all  the  industries  of  a 
nation  be  represented  by  one  hundred.  Let  us  then  assume  labor 
to  be  divided  into  five  different  classes,  though  the  divisions  in 
fact  are  as  numerous  as  the  various  occupations ;  and,  besides, 
workers  may  be  classed  also  with  reference  to  intelligence  and 
indigence  or  independence.  But  to  simplify  the  illustration,  we 
will  divide  the  workers  into  five  classes. 

Let  us  suppose,  in  the  first  instance,  that  one-tenth  part  of  the 
product  is  set  apart  as  the  share  of  capital,  and  that  the  remain- 


302  THE  DISTRIBUTION  OF  WEALTH. 

ing  ninety  parts  are  equally  divided  among  the  five  classes  of 
workers.     This  will  make  the  share  of  each  class  eighteen. 
The  statement  will  stand : 

Share  of  capital 10 

Share  of  Class  1  workers 18 

"     *"      "2        "          18 

"      "      "3        "          18 

"      "      "4       '<          18 

"      "      "5       "          18 

Total  product 100 

Now,  if,  without  increasing  the  product,  we  increase  the 
wages  of  Class  1  of  the  workers  thirty-three  and  one-third  per 
cent.,  and  of  Class  2,  sixteen  and  one-third  per  cent.,  it  is  evident 
that  the  increase  in  the  wages  of  Classes  1  and  2  must  be  drawn 
either  from  capital  or  from  the  other  classes  of  workers.  But 
an  increase  in  wages  reduces  but  little,  if  at  all,  the  aggregate 
profits  of  capital. 

The  gain  of  Classes  1  and  2  will  be  at  the  expense  of  the  other 
classes,  and  the  statement  will  stand : 

Share  of  capital 10 

Share  of  Class  1  workers 24 

"      "      "2        "        21 

"      "      «     3        "        15 

((      <i      "4        *«        15 

"      ««      "     5        "        15 

Total  product 100 

We  have  here  assumed,  what  is  not  in  fact  true,  that  the 
shares  of  Classes  3,  4,  and  5  would  be  equally  affected  by  the 
increased  wages  of  Classes  1  and  2.  The  other  classes  would 
be  unequally  affected,  according  to  the  direction  of  the  pressure 
and  the  difference  in  capacity  to  resist  reduction. 

If  we  now  increase  the  share  of  capital,  the  increase  will  be 
drawn  from  the  shares  of  labor,  and  the  loss  to  labor  will,  in 
the  end,  so  adjust  itself  as  to  fall  principally  on  the  most  help- 
less class.  After  the  competing  forces  have  had  free  play  in 
adjustment  of  wages,  we  will  suppose  the  following  statement 
to  represent  the  result. 


THE  DISTRIBUTION  OP  WEALTH.  303 

Share  of  capital 16 

Share  of  Class  1  workers 26 

((      it      "2      "         21 

((      ((      ««    8      "  16 

i(      <(      '«    4      "  18 

u      <«      <«    5      "  10 

Total  product 100 

So  far  we  have  supposed  the  product  to  remain  the  same,  and 
we  have  disregarded  money  as  a  medium  of  exchange  and 
measure  of  wages. 

In  the  beginning  the  wages  of  Classes  4  and  5  amounted  to 
thirty-six  per  cent,  of  the  product,  and  they  were  therefore 
consumers  of  that  proportion.  Their  shares  having  been  re- 
duced to  ten  and  thirteen  respectively,  they  now  consume  but 
twenty-three  per  cent,  of  the  product.  The  demand  therefore 
has,  in  this  direction,  been  reduced  in  the  amount  of  thirteen 
per  cent,  by  reason  of  reduced  consumption,  and  in  another 
direction  increased  in  like  amount  by  the  increased  consump- 
tion of  other  classes. 

This  increased  consumption  would  be,  necessarily,  to  a  great 
extent,  not  only  of  a  different  class,  but  of  a  different  grade  or 
quality  of  articles.  And,  the  industries  of  a  whole  people  having 
adjusted  themselves  to  the  conditions  arising  out  of  this  di- 
vision of  the  product,  the  shares  of  the  several  classes  of  workers 
are  fixed  by  the  conditions  and  habits  of  a  whole  people,  and 
an  increase  of  wages  in  any  department  involves  the  necessity 
of  a  change  in  these  conditions  and  habits. 

The  division  of  the  product  is  not  made  direct,  as  we  have 
assumed,  but  through  or  by  means  of  the  employment  of  money 
as  a  measure  of  values  and  a  medium  of  exchange.  Money  is 
employed  first  in  the  payment  of  wages,  and  second  in  the  pur- 
chase of  commodities.  The  completed  payment  is  not  effected 
until  labor  has  been  paid  for  in  the  products  of  other  labor. 

Capital,  whose  immediate  interest,  in  order  to  maintain  its 
margin  of  profit,  is  to  purchase  labor  at  the  lowest  price  for 
which  it  may  be  procured  in  money,  exerts  a  continual  pressure 
in  the  direction  of  lower  wages. 

The  total  product  in  the  United  States  might  be  readily  in- 
creased, say,  twenty-five  per  cent,  j  and  there  might  be  a  con- 


304  THE  DISTRIBUTION  OP  WEALTH. 

siderable  reduction  in  the  consumption  of  articles  of  luxury  and 
a  corresponding  increase  of  other  classes  of  products.  But  con- 
sumption is  measured  by  wages,  and  consumption  must  keep 
pace  with  production. 

Increasing  production  without  increasing  wages  in  corre- 
sponding ratio  reduces  prices,  and  falling  prices  are  resisted 
by  restricted  production.  If  the  wages  and  the  consumption  of 
Class  5  could  be  simultaneously  advanced  to  eighteen,  absorbing 
the  increased  product,  there  would  need  be  no  change  in  prices 
of  commodities  if  the  increase  in  product  corresponding  with 
the  increase  of  wages  did  not  exceed  eight  per  cent.  In  this 
event  the  workers  would  gain  and  no  one  would  lose. 

The  competition  which  prevents  this  represents  the  struggle 
of  individuals  for  immediate  personal  gain  at  the  expense  of  the 
interests  of  the  community  in  general.  Half  a  dozen  large  manu- 
facturing establishments  engaged  in  the  manufacture  of  ready- 
made  clothing,  for  instance,  each  seeking  the  largest  possible 
immediate  gain,  and  finding  opportunity  in  the  general  helpless- 
ness and  dependence  of  a  large  class  of  sewing-women,  may 
push  prices  of  labor  in  that  department  down  to  or  below  the 
equivalent  of  the  measure  of  the  actual  necessaries  of  life.  Com- 
peting establishments  must  manufacture  as  cheaply  or  lose 
their  trade,  and  thus  the  selfish  greed  of  a  few  may  fix  the 
compensation  of  great  numbers  of  working-people.  By  this 
course  the  general  market  for  labor  is  restricted  to  the  extent 
of  the  reduced  capacity  of  these  poorly-paid  workers  to  buy  the 
commodities  of  labor  which  they  would  desire  to  consume,  and 
the  community  gains  nothing.  The  community  is  abundantly 
able  and  willing  to  pay  these  workers  liberally  in  food,  cloth- 
ing, and  shelter ;  but  the  system  of  exchange,  under  the  pressure 
of  that  selfish  competition  in  which  each  endeavors  to  advance 
his  own  interests  at  the  expense  of  society,  prevents  it. 

The  existence  among  the  poorly-paid  classes  of  numbers  of 
those  whose  tastes  are  uncultivated,  and  whose  wants  are  few, 
who  have  little  ambition,  or  who,  from  that  necessity  which 
attends  an  impoverished  condition,  are  compelled  to  accept  what 
is  offered,  strongly  operates  to  fix  the  status  of  the  entire  class 
of  workers  of  whom  they  constitute  a  part,  both  as  to  wages 
and  condition  in  life. 


THE  DISTRIBUTION  OF  WEALTH.  306 

Those  combinations  of  labor  which  sustain  and  advance  the 
wages  of  Classes  1  and  2  are  necessarily  more  or  less  at  the  ex- 
pense of  Classes  4  and  5,  who,  because  of  their  numbers, 
their  ignorance,  and  their  poverty,  or  because  of  the  competi- 
tion of  an  indigent  and  helpless  minority  among  themselves, 
are  unable  to  contend  against  the  competing  forces  that  oppose 
them. 

While,  therefore,  it  is  not  true  that  all  employers  of  labor,  who 
pay  wages  that  are  too  low,  are  responsible  for  the  fact  that  the 
workers  in  their  employ  are  inadequately  compensated,  since 
the  employers  are  subject  to  conditions  fixed  by  others,  it  is 
true  that  the  greed  of  many  who  employ  labor  is  responsible  for 
the  hard  conditions  that  are  forced  upon  large  numbers  of 
working-people. 

While  those  who  control  capital  cannot  pay  what  they 
choose,  they  can,  if  they  have  in  general  the  disposition  to  be 
just,  assist  poorly-compensated  working-people  in  a  gradual  ad- 
vance to  fair  wages,  or,  what  is  the  same  thing,  to  a  reasonable 
share  of  the  total  product.  They  can  at  least  refuse  to  lend 
weight  to  the  downward  pressure;  and  they  can  lend  their 
assistance  to  those  gradual  changes  of  condition  essential  to  a 
proper  adjustment  of  the  several  shares  of  workers  and  capital. 

Mr.  Henry  George,  following  in  the  wake  of  the  illumined 
streak  poured  from  the  bull's-eye  lantern  of  his  logic,  explores 
the  realms  of  economic  abstractions,  and  discovers  in  the  mists 
the  following  : 

"  The  relation  between  wages  and  interest  is  determined  by  the 
average  power  of  increase  which  attaches  to  capital  from  its  use 
in  reproductive  modes.  As  rent  arises,  interest  will  fall  as 
wages  fall,  or  will  be  determined  by  the  margin  of  cultivation." 

This  formula,  subjected  to  a  careful  assay,  will  be  found  to 
contain  these  general  truths:  First,  as  profits  of  capital  in 
general  increase,  the  rate  of  interest  tends  to  advance ;  as  profits 
diminish,  the  rate  of  interest  is  reduced.  Second,  as  rent  ad- 
vances, interest  and  wages  both  go  down.  Neither  of  these 
propositions  are  universally  true,  and  the  latter  is  not  generally 
true.  When  profits  are  large,  neither  the  landlord  nor  the 
money-lender  fails  to  secure  a  liberal  share ;  when  profits  are 
small,  they  must  both  be  content  with  less.    There  are  condi- 

20 


306  THE  DISTRIBtJTION  OF  WEALTH. 

tions,  such  as  the  limited  area  of  land  suitable  for  the  purpose 
for  which  it  is  required  or  the  scarcity  of  capital,  that  affect 
the  relative  shares  of  the  lender  of  money,  the  landlord,  and  the 
worker;  but  these  conditions  cannot  be  exhibited  within  the 
compass  of  a  formula.  Propositions  like  this,  made  up  by  the 
mere  juxtaposition  of  related  truths,  afford  little  aid  in  the 
solution  of  economic  questions. 

Of  a  somewhat  similar  character  is  a  proposition  announced 
by  Bastiat,  and  quoted  by  other  writers  on  political  economy, 
and  recently  by  Mr.  Atkinson,  who  says  that,  by  its  application, 
he  has  been  able  to  observe  the  phenomena  of  wages  with  much 
clearer  insight.     It  is  as  follows : 

"  In  proportion  to  the  increase  of  capital  the  absolute  share 
of  the  total  product  falling  to  the  capitalist  is  augmented,  but 
his  relative  share  is  diminished;  while,  on  the  contrary,  the 
share  of  the  laborer  is  increased  both  absolutely  and  relatively." 

Generalizations  of  this  character,  declaring  the  concurrence 
of  certain  phenomena,  without  the  exhibition  of  any  principle 
of  sequence,  or  philosophy  of  relation,  may  be  manufactured  at 
will ;  and,  possessing  the  quality  of  ponderosity,  are  frequently 
accorded  recognition  as  principles  of  science. 

Let  us  examine  the  proposition  just  quoted  from  Bastiat. 
We  are  met  at  once  by  the  question.  What  is  here  meant  by. 
"the  increase  of  capital?"  If,  by  this  expression,  is  meant 
simply  an  increase  in  the  quantity  of  the  tools,  machinery,  and 
materials  employed  in  agriculture  and  manufacture,  and  of  the 
store  of  food  and  clothing  on  hand  to  maintain  the  worker,  we 
have  one  meaning ;  if  credits  are  embraced,  we  have  another ; 
and  if  by  increase  of  capital  is  meant  not  only  the  actual 
increase,  but  also  that  aggregation  of  wealth  which  is  generally 
included  in  the  description  "an  increase  of  capital,"  we  have 
still  a  third  meaning.  Taken  in  the  latter  sense,  the  proposition 
is  not  true. 

From  British  statistics,  as  given  by  Mulball,  we  learn  that  in 
1688,  when  the  gentry  and  middle  classes  of  Great  Britain  to- 
gether comprised  one-tenth  of  the  population,  this  one-tenth 
enjoyed  four-tenths,  or  forty  per  cent.,  of  the  total  amount  of  the 
incomes  of  the  British  nation.  In  1800  these  classes  together 
constituted  twelve-hundredths  of   the   population;  they  then 


THE  DISTRIBUTION  OP  WEALTH.  807 

enjoyed  thirty-seven  per  cent,  of  the  amount  of  total  income ;  in 
1883  these  classes  remained  relatively  the  same  as  in  1800,  butj 
enjoyed  forty-five  per  cent,  of  the  total  income ;  showing  thatf 
from  1800  to  1883  the  relative  share  of  capitalists  had  increased. | 
In  1800  the  working-people  (not  including  trades-people)  were  \ 
less  than  two-thirds  of  the  whole  population ;  their  share  of  the  \ 
total  earnings  was  a  fraction  over  one-third  of  the  total  earnings ; 
in  1883  their  number  had  relatively  increased  a  very  little,  but 
their  share  of  the  total  earnings  had  not  kept  pace, — we  may 
say,  in  round  numbers,  that  the  proportion  of  numbers   and 
earnings  had  remained  the   same;  yet  the  proportionate   in- 
crease of  wealth  was  fifty  per  cent,  greater  than  the  increase 
of  population.    These  statistics  do  not  take  into  account  the 
much  larger  proportion  of  earnings,  or  of  production  by  means 
of  domestic  manufacture,  in  1800,  that  are  not  counted  in  the 
estimate  of  earnings. 

Not  is  it  true  that,  in  the  United  States,  the  proportionate 
share  of  earnings,  absorbed  by  capital  in  the  form  of  profits, 
interest,  and  rents,  has  grown  smaller,  or  that  the  proportionate 
share  of  the  worker  has  grown  larger. 

It  is  true  that,  with  the  wonderful  development  in  our  indus- 
tries and  increase  in  the  productive  capacity  of  labor,  the 
average  earnings  per  capita  have  increased.  It  is  also  true 
that  the  worker  has  become  more  dependent,  that  the  number 
of  those  whose  living  is  precarious  and  the  number  who  are 
exposed  to  penury  and  extreme  want  have  increased  absolutely 
and  relatively.  The  proportion  of  those  without  homes  has 
increased  and  is  still  increasing. 

It  is  not  claimed  that  capital  absorbs  all  the  increase  of  the 
products  of  labor.  But  capital  is  absorbing  the  principal  portion 
of  the  savings  or  durable  products  of  labor;  and  the  aggregation 
of  wealth  in  the  ownership  of  a  relatively  small  number  of 
persons  is  rapidly  bringing  the  American  people  to  the  condi- 
tion of  European  people,  and  is  making  impracticable  that 
general  distribution  of  wealth  which  is  essential  to  the  pros- 
perity and  happiness  and  to  the  moral  and  social  well-being  of 
the  people  of  this  country. 

Against  the  increase  of  capital  there  is  no  complaint.  The 
objection  lies  to  the  undue  aggregation  of  wealth,  and  to  the 


308  THE  DISTRIBUTION  OF  WEALTH. 

subordination  of  production  to  the  purpose  of  building  fortunes 
for  a  few  at  the  expense  of  interrupted  industry,  unemployed 
working-men,  and  the  oppression  of  a  large  and  growing  class 
of  helpless  and  dependent  poor.  If  it  were  true  that  the  average 
earnings  of  a  working-man  are  sufficient,  the  fact  that  there  are 
large  numbers  whose  compensation  is  neither  adequate  nor  just 
still  remains.     Justice  is  not  satisfied  with  general  averages. 

It  is  no  answer  to  the  claims  of  the  working-people  to  say 
that  the  earnings  of  labor  have  increased,  and  are  more  now 
than  formerly. 

There  are  admitted  evils.  It  is  not  the  principal  duty  of 
political  economists  to  hunt  excuses  for  them;  their  efforts 
should  be  expended  rather  in  seeking  the  cause  and  the  reme- 
dies. 

It  is  not  the  purpose  of  this  chapter  to  formulate  a  "  law"  of 
wages  or  a  "  law"  of  profits.  %  The  statement  of  the  principle  or 
causes  by  which  the  relative  shares  of  capital  and  labor  are 
determined,  and  the  definite  results  of  their  operation,  can  no 
more  be  compressed  within  the  limits  of  an  economic  formula 
than  the  law  which  determines  the  force  of  the  wind  or  the 
height  of  a  wave.  Wages  constitute  one  part  of  the  product  of 
labor,  profits  of  capital  another  part.  The  relative  sizes  of  these 
shares  are  the  resultant  action  of  many  conflicting  forces. 
What  these  forces  are,  the  influences  that  limit  and  control 
them,  and  determine  their  power  and  intensity,  I  have  sought 
to  make  clear  in  the  several  chapters  of  this  book.  The  purpose 
of  this  chapter  is  to  exhibit  the  tenor  of  doctrines  held  by 
writers  of  acknowledged  merit  on  economic  science. 

As  an  author  whose  views  have  had  much  influence  in  shap- 
ing modern  doctrines  of  political  economy,  T.  E.  Malthus,  A.M., 
who  wrote  in  1803,  holds  prominent  place.  The  following  quo- 
tations from  his  writings  indicate  their  tenor  : 

"The  increase  of  population  is  necessarily  limited  by  the 
means  of  subsistence. 

"  Population  invariably  increases  when  the  means  of  subsist- 
ence increases,  unless  prevented  by  powerful  and  obvious 
checks.  These  checks,  and  the  checks  which  keep  population 
down  to  the  level  of  means  of  subsistence,  are  moral  restraint, 
vice,  and  misery.    It  has  appeared  from  the  inevitable  laws  of 


THE  DISTRIBUTION  OF  WEALTH.  309 

human  nature  some  human  beings  will  bo  exposed  to  want. 
These  are  the  unhappy  persons  who,  in  the  great  lottery  of  life, 
have  drawn  a  blank." 

He  quotes  approvingly  Arthur  Young,  as  follows :  "  If  you 
would  see  a  district  with  as  little  distress  as  is  consistent  with 
the  political  system  of  the  old  government  of  France,  you  must 
assuredly  go  where  there  are  no  little  proprietors  at  all.  You 
must  visit  the  great  farms  in  Beauce,  Picardy,  part  of  Nor- 
mandy, and  Artois,  and  there  you  will  find  no  more  population 
than  what  is  regularly  employed  and  regularly  paid  ;  and  if  in 
such  districts  you  should,  contrary  to  the  rule,  meet  with  much 
distress,  it  is  twenty  to  one  but  that  it  is  in  a  parish  which  has 
some  commons,  which  tempt  the  poor  to  have  cattle,  to  have 
property,  in  consequence  misery.  When  you  are  engaged  in 
this  political  tour,  finish  by  seeing  England,  and  I  will  show  you 
a  set  of  peasants  well  clothed,  well  nourished,  tolerably  drunken 
from  superfluity,  well  lodged  and  at  their  ease ;  and  yet  among 
them  not  one  in  a  thousand  has  either  land  or  cattle." 

Malthus,  continuing,  says,  "  The  specific  cause  of  the  poverty 
and  misery  of  the  lower  classes  of  people  in  France  and  Ireland 
is  that  by  the  extreme  subdivision  of  the  property  in  the  one 
country,  and  the  facility  of  obtaining  a  cabin  and  potatoes  in  the 
other,  a  population  is  brought  into  existence  which  is  not  de- 
manded by  the  quantity  of  capital  and  employment  in  the  country. 
And  the  consequence  of  which  must  necessarily,  therefore,  be 
...  to  lower  in  general  the  price  of  labor  by  too  great  com- 
petition, from  which  must  result  complete  indigence  to  those 
who  cannot  find  employment,  and  incomplete  subsistence  even 
to  those  who  can. 

"The  desirable  thing,  with  a  view  to  the  happiness  of  the 
common  people,  seemed  to  be  that  their  habitual  food  should  be 
dear,  and  their  wages  regulated  by  it ;  but  that  in  scarcity  or 
other  occasional  distress,  the  cheaper  food  should  be  readily  and 
cheerfully  adopted." 

The  idea  that  the  poverty  of  the  Irish  people  is  caused  by  the 
facility  for  getting  cabins  and  potatoes,  rather  than  by  the  want 
of  facility  for  getting  anything  better,  has  the  genuine  ring  of 
classically  orthodox  political  economy. 


310  THE  DISTRIBUTION  OP  WEALTH. 


CHAPTEE  XL 

LIMITATIONS  ON  PROFITS — REMEDIES  FOR  LOW  WAGES — ^WHAT  MAKES 
THE  RATE  OF  WAGES. 

The  profits  of  capital  in  the  same  field  of  competition,  whether 
invested  in  one  industry  or  many,  tend  to  a  common  level. 
Capital  always  seeks  that  form  of  investment  affording  the 
largest  returns  with  the  least  risk  of  loss ;  and,  when  readily 
convertible  into  money,  it  flows  from  one  industry  to  another 
until  an  equilibrium  is  attained.  Such  is  the  universal  ten- 
dency, checked  and  restrained  by  the  constant  operation  of 
hindering  causes.  This  general  tendency  is  well  understood, 
and  requires  no  comment.  The  obstructing  conditions  or  causes 
arise  out  of  the  fact  that  capital  invested  in  certain  forms,  as 
shops,  mills,  furnaces,  and  lands,  cannot  be  withdrawn  and  di- 
verted to  other  purposes,  and  from  the  immobility  of  labor.  It 
hence  results  that  the  profits  of  diff'erent  industries  greatly 
vary,  and  that  through  long  periods  of  time. 

But  the  question  to  which,  in  this  connection,  I  desire  to 
direct  special  attention  is.  What  are  the  principles  that  deter- 
mine the  relative  shares  of  capital  and  labor,  of  the  product  of 
labor ;  what  are  the  economic  forces,  by  the  operation  of  which 
capital  is  enabled  to  say,  "  So  much  is  mine,  and  so  much  I  leave 
to  you"  ?  Wages,  we  are  told,  are  the  remainder  after  the  share 
of  capital  has  been  taken  out ;  the  residue  after  capital  has 
drunk  his  fill ;  the  cold  meats  for  the  waiters  after  the  banquet 
is  over.  *' Wages,"  says  Atkinson,  "therefore,  are  apparently 
deferred  to  profits ;  but,  on  the  other  hand,  wages  constitute  all 
that  there  is  left.*^  It  is  not  my  purpose  to  question  this  view. 
It  correctly  expresses  the  existing  relation  between  capital  and 
labor.  But  why  the  relation  of  dependence  implied  in  this  form 
of  statement? 

Again,  it  is  an  accepted  dogma  of  political  economy,  until 
recently  rarely  questioned,  that  the  rate  of  wages  is  determined 
by  the  relative  amount  of  capital,  which  constitutes  the  fund 
from  which  wages  must  be  drawn.    I  do  not  quote  this  doctrine 


THE  DISTRIBUTION  OP  WEALTH.  311 

to  Banction  it,  but  to  show  the  utter  dependence  of  labor  upon 
capital  according  to  the  views  entertained  by  standard  author- 
ities upon  the  subject  of  political  economy.  According  to  this 
view  the  wages  of  labor,  and  therefore  the  profits  of  capital, 
which  are  the  correlative  of  wages,  are  determined  by  condi- 
tions over  which  the  laborer  exercises  no  control.  Current  and 
generally  accepted  dogmas  of  political  economy  appear  to  regard 
the  worker  merely  as  an  inanimate  factor,  whose  wishes  and 
whose  necessities  do  not  at  all  enter  into  the  problem.  I  do  not 
claim  that  such  conclusion  has  been  announced  or  formulated, 
but  only  that  it  is  the  logical  sequence  of  doctrines  embodied  in 
the  orthodox  code  of  economic  science. 

This  merely  illustrates  what  every  one  familiar  with  standard 
authors  must  have  observed,  that  writers  upon  political  econ- 
omy have  been  accustomed  to  view  the  subject  from  the  stand- 
point of  the  interest  of  capital  rather  than  that  of  the  interest 
of  labor,  and  that  the  policies  of  the  past  have  been  shaped 
without  due  consideration  of  the  rights  and  interests  of  tho 
working-people. 

It  is  true,  in  a  measure,  that  these  writers  have  treated  facts 
as  they  found  them,  and  estimated  social  forces  as  they  existed ; 
but  it  is  also  true  that  they  have  persistently  overlooked  the 
open  way  through  which  imprisoned  humanity  might  escape 
from  the  bondage  of  perpetual  poverty. 

Much  ingenuity  has  been  wasted  in  shaping  idle  theories  that 
explain  no  phenomenon  of  economic  science,  and  contribute 
nothing  to  the  store  of  useful  information.  Belonging  to  this 
class  of  unprofitable  speculation  is  what  is  known  as  Ricardo's  law 
of  rent,  the  formal  declaration  of  which  may  be  found  in  every 
standard  work  on  political  economy.  But,  until  Henry  George 
put  it  into  the  foundation  of  his  peculiar  doctrine  regarding 
land,  it  was  without  value,  except  as  an  a  priori  spring-board 
to  assist  learned  professors  in  feats  of  intellectual  gymnastics. 

The  "  doctrine,"  as  by  conventional  courtesy  it  is  called,  is 
formulated,  in  the  words  of  John  Stuart  Mill,  as  follows; 
"  The  rent  which  any  land  will  yield  is  the  excess  of  its  produce 
beyond  what  would  be  returned  to  the  same  capital  if  employed 
on  the  worst  land  in  cultivation."  Mr.  Mill  devotes  several 
pages  to  its  elucidation.    The  proposition  is  true  enough  as  a 


312  THE  DISTRIBUTION  OF  WEALTH. 

statement  of  abstract  principle  applicable  to  assumed  conditions, 
being  merely  an  indirect  statement  of  the  well-understood  and 
universally-observed  fact,  that  the  productiveness  of  land  is  the 
measure  of  its  value.  Land  that  will  produce  no  more  than  the 
amount  requisite  to  pay  for  the  labor  and  capital  required  in 
production  is  worth  nothing,  since  it  contributes  nothing  beyond 
cost  of  cultivation;  and  just  in  proportion  as  the  product  in- 
creases beyond  that  point,  and  there  is  a  margin  above  cost  of 
cultivation,  land  possesses  commercial  value.  But  no  principle 
is  here  elucidated ;  there  is  no  contribution  to  political  science, — 
merely  a  commonplace  fact  in  uniform,  taken  for  a  law,  on  the 
same  principle  that  small  boys  are  liable  to  mistake  drum-majors 
for  generals. 

In  comment.  Mill  says,  "  This  is  the  theory  of  rent,  first  pro- 
pounded at  the  end  of  the  last  century  by  Dr.  Anderson,  and 
which,  neglected  at  the  time,  was  almost  simultaneously  redis- 
covered, twenty  years  later,  by  Sir  Edward  West,  Mr.  Malthus, 
and  Mr.  Eicardo.  It  is  one  of  the  cardinal  doctrines  of  political 
economy ;  and,  until  it  was  understood,  no  consistent  explana- 
tion could  be  given  of  many  of  the  more  complicated  industrial 
phenomena." 

This  "  doctrine"  may  have  been  unknown  to  scientists,  and 
may  have  been  discovered,  as  Mill  says,  by  "West,  Malthus,  and 
Eicardo.  Nevertheless,  landlords  and  tenants  had  known  it  all 
the  while,  only  they  did  not  know  a  name  for  it. 

If  some  industrious  far-fetched  individual  should  chance  to  in- 
vent an  elaborate  and  ingenious  formula,  in  which  the  little  fact 
that  two  plus  two  are  four  could  be  wrapped  so  as  to  require 
considerable  mental  eifort  at  each  undoing,  he  would  incur  great 
risk  of  being  embalmed  by  fame  as  the  discoverer  of  a  new 
principle  in  addition. 

The  total  product  of  a  country  may  be  said  to  be  divided  into 
two  parts :  one  part,  being  the  share  of  labor,  represents,  the 
wages  or  earnings  of  workers ;  the  other  part,  being  the  share 
of  capital,  represents  the  amount  appropriated  by  the  owners 
of  capital,  as  their  compensation  for  its  use.  But  who  decides, 
and  how  is  it  determined,  where  the  dividing  line  shall  be 
drawn  ?  Is  there  any  rule  of  right  and  wrong,  or  any  economic 
law,  by  which  this  division  is  determined  ? 


THE  DISTRIBUTION  OP  WEALTH.  313 

Should  fifty  pounds  of  meat  be  tossed  to  two  lions,  it  would 
be  impossible  to  determine  by  a  priori  reasoning  just  how  much 
of  that  meat  each  lion  would  get.  The  factors  in  the  problem 
would  be  the  quantity  of  meat,  the  relative  appetites  of  the  two 
beasts,  the  strength  of  their  respective  jaws,  the  length  and 
sharpness  of  their  claws,  and  the  relative  fierceness  of  their  dis- 
positions. He  who  should  attempt  to  determine  the  result  of 
the  competition  by  estimating  these  factors  might  be  regarded 
as  proceeding  according  to  scientific  methods  j  but  if  a  reliable 
answer  be  desired,  the  only  way  is  to  wait  and  see  the  animals 
eat.  This  we  have  done  in  the  chapter  on  "  Production  and 
Distribution." 

We  have  observed  that  the  lion  Capital  gets  the  larger  share ; 
while  Labor  growls  and  shows  his  teeth.  Capital  eats  the  meat. 
Capital  is  a  valuable  lion,  and  we  cannot  aiford  to  slay  him ; 
and  if  we  could  but  trim  his  claws  or  file  his  teeth,  and  in  this 
manner  compel  him  to  observe  the  golden  rule  and  do  unto 
others  as  he  would  have  others  do  unto  him,  he  might  become  a 
most  exemplary  lion.  But  the  veterinary  chiropodist  and  den- 
tist possessing  the  requisite  strength  and  skill  to  perform  this 
service  has  not  yet  come  forward  ;  nor  is  he  to  be  looked  for  in 
the  form  of  a  professor  of  the  orthodox  school  of  political 
economy. 

To  generalize  the  truth  which  I  have  sought  to  illustrate,  I 
may  say  that  the  division  of  the  product,  which  constitutes  the 
sum  of  the  wages  of  labor  and  the  profits  of  capital,  between 
the  workers  and  the  owners  of  capital,  into  wages  and  profits, 
is  the  combined  effect  of  two  opposing  and  ever-varying  forces, 
which  spring  out  of  changing  social  and  industrial  conditions, 
and  which  cannot  be  measured,  except  in  their  results,  as  mani- 
fested in  the  division  which  actually  takes  place.  Neither  wages 
nor  profits  can  be  ascertained  by  rule  ;  nor  may  they  be  fixed 
by  legislative  law,  except  in  so  far  as  the  conditions  by  which 
they  are  determined  may  be  slowly  modified  by  the  effects  of 
legislation,  or  economic  forces  may  be  restrained  from  produc- 
ing their  ordinary  results  by  the  limitations  of  law.  The  only 
exception  to  this  general  proposition  that  need  be  noted,  and 
that  is  an  apparent  rather  than  a  real  exception,  is  in  the  case 
of  natural  monopolies,  where  by  law  charges  may  be  limited 


314  THE  DISTKIBUTION  OF  WEALTH. 

below  a  maximum  rate,  and  limitations  on  rates  of  interest, 
which  rest  upon  special  grounds,  and  do  not  fall  within  the 
reason  of  the  general  rule. 

It  is  a  habit  of  writers  on  economic  science  to  assert  with  loud 
emphasis  that  there  is  no  conflict  between  capital  and  labor. 
The  most  ignorant  working-man  knows  better.  He  may  not 
comprehend  the  precise  nature  of  the  conflict,  nor  be  able  to 
see  where  it  begins  or  where  it  ends ;  but  that  there  is  a  con- 
flict, in  which  he  is  continually  worsted,  he  knows  full  well. 
He  knows  that  every  stone  in  the  palaces  of  the  rich  was  lifted 
and  laid  in  place  by  the  hands  of  working-men.  He  knows  that 
the  dwellings  of  the  poor,  for  which  they  pay  monthly  tribute 
to  capital  in  name  of  rent,  are  the  product  of  labor.  He  knows 
that  silks  and  satins  and  gauzy  laces,  that  lend  enchantment  to 
the  beauty  of  fine  ladies,  are  not  gathered  from  trees,  but  are 
the  products  of  ill-requited  toil ;  and  why  attempt  to  deceive 
him  ?  The  day  has  gone  by  when  gross  public  wrongs  may  be 
successfully  defended  by  denying  the  existence  of  facts  that  lie 
clearly  exposed  to  the  view  of  whoever  may  choose  to  look. 
There  is  a  conflict  between  capital  and  labor ;  and  it  is  the  duty 
of  the  political  economist  to  define  its  nature  and  character, 
that  society  may  be  protected  against  the  growth  of  doctrines 
that  may  endanger  social  order. 

In  production  the  interests  of  capital  and  labor  are  combined, 
they  are  mutual ;  but  in  the  division  of  the  joint  product  into 
wages  and  profits,  terms  which  describe  the  respective  shares 
of  the  worker  and  the  owner  of  capital,  these  interests  become 
two  antagonistic  forces ;  and  the  owners  of  capital  and  the 
workers  contend  in  opposition,  each  for  the  larger  share  of  the 
same  thing. 

The  tendency  of  capital  is,  therefore,  to  force  wages  down  to 
the  "  minimum  fixed  by  what  is  called  the  standard  of  comfort, 
— that  is,  the  amount  of  necessaries  and  comforts  which  habit 
leads  the  working-classes  to  demand  as  the  lowest  on  which  they 
will  consent  to  live."  While  the  tendency  of  the  opposing  force, 
the  interests  of  the  workers,  is  to  force  the  profits  of  capital 
down  to  the  minimum  which  the  owners  of  capital  will  consent 
to  accept  as  necessary  to  maintain  them  in  the  style  of  living 
prescribed  for  them  by  custom  or  fashion  and  social  ambition, 


THE  DISTRIBUTION  OP  WEALTH.  316 

or  to  augment  their  fortunes  by  accumulations  of  additional 
wealth. 

LIMITATIONS   ON   PROFITS. 

As  I  have  already  said,  we  cannot  measure  these  forces,  ex- 
cept by  their  results.  Their  character,  being  inherent  in  the 
nature  of  things,  may  not  bo  altered  by  the  force  of  legal  enact- 
ments. But  there  are  certain  limitations  upon  their  operation 
to  which  I  desire  to  call  attention.  These  limitations  are,  first, 
natural  limitations ;   second,  limitations  imposed  by  law. 

First,  as  to  natural  limitations. 

The  total  product  may  be  regarded  as  divided  into  two  parts, 
the  first  part  consisting  of  perishable  products,  such  as  food  and 
clothing,  which,  being  of  such  a  nature  as  to  require  that  they 
be  consumed  within  the  limits  of  a  short  period,  the  amount  of 
wealth  which  can  b©  saved  or  stored  in  this  form  is  limited  by 
the  amount  of  the  product  which  may  be  on  hand  at  any  one 
time ;  the  other  part,  consisting  of  durable  products,  such  as 
machinery,  houses,  furniture,  horses,  carriages,  paintings,  statu- 
ary, and  other  form  of  property  that  endures  through  a  con- 
siderable period  of  time.  The  two  classes,  it  will  be  observed, 
merge  into  each  other.  What  are  designated  as  the  savings 
of  labor,  or  the  savings  of  capital  from  year  to  year,  must  take 
the  form  of  durable  property.  There  may  be  a  temporary  saving 
in  the  form  of  perishable  property,  subject  to  the  necessary  limi- 
tation, both  as  to  amount  and  period  of  duration.  Being  so 
limited,  the  perishable  product  is  not  usually  embraced  within 
the  meaning  of  the  term  savings,  as  employed  in  the  discussion 
of  the  subject  of  wealth. 

The  total  product,  including  both  that  which  may  be  classed 
as  perishable  and  that  which  may  be  termed  durable,  is  limited 
by  the  total  demand  of  consumption,  as  well  as  by  the  capacity 
of  labor  to  create. 

The  total  profits  of  capital  are  represented  by  that  portion  of 
the  total  product  set  apart  to  the  credit  of  the  owners  of  capital, 
and  which  must  consist  of  either  perishable  or  durable  property 
or  of  both.  The  portion  of  profits  which  is  paid  in  the  form 
of  perishable  products  is  limited  to  the  amount  of  food  and 
clothing  and  things  of  like  character  which  the  owners  of 
capital  and  their  families  can  directly  consume,  and  which  they 


316  THE  DISTRIBUTION   OF  WEALTH. 

raay  indirectly  consume  in  the  form  of  personal  or  professional 
service,  such  as  the  services  of  domestics  and  coachmen  in 
livery,,  brass  bands,  theatrical  players,  ministers  and  mission- 
aries, music-teachers  and  dancing-masters,  and  so  on  through 
the  list  of  occupations  classed  under  the  head  of  personal  and 
professional  service.  It  will  be  seen  that  the  amount  of  perish- 
able products  which  the  owners  of  capital  may  consume,  though 
large,  is  necessarily  limited. 

The  amount  of  durable  property,  in  the  form  of  dwellings, 
horses,  carriages,  paintings,  statuary,  and  the  like,  which  the 
owners  of  capital  can  appropriate  to  their  own  use,  or  which 
they  may  indirectly  employ  through  the  personal  and  profes- 
sional service  classes,  has  like  limitations.  The  boundaries  are 
still  farther  out;  and,  under  the  pressure  of  improved  tastes, 
vanity,  or  love  of  luxury,  keep  expanding,  limited  only  by  the 
reach  of  human  desire.  But  when,  at  any  time,  the  supply 
of  durable  property  has  approximated  somewhat  closely  the 
amount  required  to  satisfy  the  more  reasonable  demand,  prop- 
erty of  that  character  increases  but  slowly ;  since  people  of 
wealth  do  not  readily  abandon  or  pull  down  good  houses,  that 
come  near  the  measure  of  their  desires,  in  order  to  build  better 
ones ;  they  do  not  discard  the  old  paintings  to  make  room  on 
the  wall  for  new.  Conditions  become  fixed  ;  a  stationary  point 
is  reached  ;  and  the  demand  for  new  buildings  travels  but  little 
in  advance  of  the  increase  of  population. 

The  other  forms  of  durable  proj^erty  which  absorb  the  in- 
vestments of  the  profits  of  capital  embrace  railways,  ships, 
factories,  tools,  and  other  revenue-bearing  property,  including 
houses  to  rent.  This  form  of  property  has  its  limitations  in  the 
demand,  which  grows  but  slowly  from  year  to  year.  In  Eng- 
land, and  also  in  this  country,  the  demand  for  this  class  of 
property  is  already  well  supplied. 

There  is  not  room  for  the  expenditure  of  a  great  amount  of 
constructive  labor  in  any  one  year,  in  creating  durable  revenue- 
bearing  property.  The  supply  is  apace  with  the  growth  of 
population.  We  cannot  keep  on  at  the  old  speed,  building 
factories  and  mills  and  railroads ;  and,  in  consequence,  that  part 
of  the  product  which  we  call  savings,  and  which  represents  the 
increase  of  wealth  from  year  to  year,  must  fall  off. 


THE  DISTRIBUTION  OP  WEALTH.  317 

The  principal  effect  of  the  conditions  now  reached  is  a  reduc- 
tion of  the  savings  of  capital ;  and  the  savings  of  capital  being 
a  part,  and  the  greater  part,  of  the  profits  of  capital,  the  profits 
of  capital  must  fall.  The  savings  of  labor  will  suffer  less,  since 
labor  saved  but  little  hitherto,  and,  since  something  cannot 
be  taken  from  nothing,  the  quotient  will  not  suffer  violent 
diminution. 

But  capital  has  one  other  resource,  the  folly  of  farmers.  By- 
loaning  their  surplus  capital  on  farms,  capitalists  bring  about 
this  result :  at  the  end  of  a  year,  or,  say,  a  period  of  five  years, 
the  farmers  have  consumed  in  food,  clothing,  or  investment  in 
stock  or  buildings  a  larger  share  of  the  total  product  than  that 
which  is  represented  by  their  own  labor  during  the  same  period, 
or,  if  the  same  amount,  at  prices  maintained  on  a  higher  scale 
as  to  manufactured  products,  and  on  a  lower  scale  as  to  agri- 
cultural products,  and  the  profits  of  capital  have  been  kept  up. 
Except  for  this,  and  other  like  fields  of  investment,  profits  of 
capital  and  rates  of  interest  would  have  gone  down  from  the 
effects  of  natural  causes.  In  England,  and  in  all  old  communi- 
ties which  have  reached  a  state  of  completed  development,  rates 
of  interest  go  down,  because  the  margin  of  savings  is  reduced, 
and  would  go  much  lower,  except  that  they  are  kept  up  by 
investments  in  credits  in  other  countries  or  other  sections  of 
the  same  country,  where  a  fixed  status  has  not  yet  been  reached 
and  there  is  more  rapid  increase  of  durable  wealth.  English 
capital  confined  on  English  soil  would  not  command  a  rate  of 
interest  above  two  and  a  half  or  three  per  cent.,  and  I  believe 
not  above  two  per  cent.,  and  New  England  capital  would  subsist 
on  lean  profits,  except  for  the  rapidly-developing  West. 

But,  while  the  interest  and  profits  go  down,  as  the  margin  of 
savings  narrows,  it  is  because  of  the  fact  that  the  margin  of 
savings  grows  small  that  profits  do  go  down,  and  the  oppor- 
tunity of  labor  to  save  disappears  at  the  same  time.  A  low 
rate  of  interest  indicates  low  wages,  though  it  does  not  cause 
low  wages.  When  two  horses  in  the  same  pasture  grow  lean  at 
the  same  time,  we  do  not  infer  that  one  is  lean  because  the  other 
is,  but  that  both  are  poor  because  the  pasture  is  short.  This  is 
a  distinction  which  some  writers  on  political  economy  have  not 
always  observed. 


318  THE  DISTRIBUTION   OF  WEALTH. 

Adam  Smith  apparently  entertained  the  opinion  that  reduc- 
tion in  profits  of  capital  is  to  be  attributed  to  the  competition 
of  capital  growing  out  of  its  increase.  John  Stuart  Mill  does 
not  fall  into  this  error,  but  offers  the  explanation  of  Mr.  Wake- 
field, which  is  as  follows :  "  On  a  limited  extent  of  land  only  a 
limited  quantity  of  capital  can  find  employment  at  a  profit.  As 
the  quantity  of  capital  approaches  this  limit,  profit  falls ;  when 
the  limit  is  attained,  profit  is  annihilated,  and  can  only  be 
restored  through  an  extension  of  the  field  of  employment." 
While  the  explanation  embraces  a  general  fact,  it  is  founded  on 
reasoning  that  is  unsound,  and  leads  to  the  false  inference,  that 
the  tendency  to  lower  profits  finds  its  entire,  or  even  its  princi- 
pal, explanation  in  the  limitations  of  agriculture.  The  true 
explanation  must  be  found  in  the  limitations  of  wealth. 

It  has  already  been  stated  that  credits  constitute  an  outlet  for 
the  savings  of  capital.  The  volume  of  credits,  however,  has  its 
limitations  in  the  fact  that  they  may  not  exceed  a  certain 
relative  ratio  to  the  property  of  the  country. 

It  will  be  seen,  therefore,  that  the  natural  limitations  on 
profits  are,  in  part,  the  same  as  the  limitations  on  wealth ;  and 
that,  except  for  the  agency  of  credits,  the  margin  of  profits 
would  tend  rapidly  to  the  minimum,  which  would  represent  the 
annual  consumption  by  capitalists  of  perishable  products,  and 
the  maintenance  and  annual  increase  of  durable  property 
directly  owned  by  capitalists.  Limitations  on  the  rate  of 
interest,  or  limitations  on  the  amount  of  real  estate  which  may 
be  owned  by  any  one  person,  will  operate  as  a  limitation  on 
profits,  and  will  have  the  effect  to  increase  wages  as  compared 
with  profits. 

My  purpose  in  pointing  out  these  limitations  on  profits  is  to 
lead  the  way  to  some  avenue  through  which  it  may  be  prac- 
ticable to  reach  excessive  profits  by  means  of  effective  legislative 
limitations,  general  in  character,  practical  in  operation,  and  free 
from  the  objection  of  a  tendency  to  hinder  production. 

The  first  measure  that  suggests  itself  as  fully  complying  with 
these  conditions  is  a  low  limit  on  the  rate  of  interest.  The 
effect  that  would  follow  would  be  to  take  from  capital  the  power 
to  absorb  that  portion  of  the  product  which  is  represented  by 
interest  accumulations  effected  by  the  present  excess  of  the  rate 


THE  DISTRIBUTION  OF  WEALTH.  319 

of  interest  over  the  rate  that  might  be  fixed.  Should  the  rate 
be  fixed  at  three  per  cent.,  the  annual  share  of  the  product  set' 
apart  to  the  credit  of  capital  would  be  reduced  in  the  amount 
of  about  three  hundred  million  dollars,  which  sum,  deducted 
from  the  profits  of  capital,  would  go  to  the  credit  of  wages,  and 
the  wages  of  each  worker  would  be  proportionally  increased. 
But,  since  the  tendency  of  the  rate  of  profit  on  capital,  in  all 
forms  of  investment,  is  towards  a  common  level,  a  reduction  in 
the  rate  of  interest  would  be  followed  by  a  corresponding  reduc- 
tion in  rents  of  dwellings  and  other  forms  of  profits ;  and  the 
indirect  efifect  of  lowering  the  rate  of  interest  would  be  as  great 
as  the  direct  effect ;  and  the  portion  of  the  annual  product 
which  would  be  thereby  withdrawn  from  profits  and  added  to 
wages  would  not  be  less  than  six  hundred  millions  of  dollars,  or 
an  increase  of  thirty  dollars  to  each  worker. 

The  immediate  effect  of  thus  impairing  the  value,  by  limiting 
the  absorbing  power,  of  credits  would  be  an  attempt  on  the  part 
of  capitalists  to  convert  a  large  portion  of  credits  into  real 
estate;  and  agricultural  lands  would  be  in  demand  as  a  safe 
form  of  investment,  not  subject  to  the  full  force  of  restrictions 
on  profits  of  capital  otherwise  invested,  for  the  reason  that  land, 
being  limited  in  area,  the  profits  of  agriculture  are  forced  up  by 
the  demand  for  food,  the  supply  of  which  is  confined  within 
bounds  that  may  be  extended  only  by  improved  methods  of 
agriculture,  and  that  gradually,  and  within  limits  unalterably 
fixed  by  physical  laws.  It  would,  therefore,  be  advisable,  if  not 
necessary,  to  limit  the  amount  of  land  which  any  one  person 
ma}^  own.  This  latter  limitation  would  have  its  direct  effect 
upon  the  limitation  of  profits  of  capital,  and  is  to  be  commended 
as  an  independent  measure ;  but,  in  conjunction  with  the  reduc- 
tion of  the  rate  of  interest,  it  would  be  an  essential  part  of  a 
successful  scheme  to  restrain  the  omnivorous  propensities  of 
capital,  and  secure  to  labor,  in  the  form  of  increased  wages,  a 
larger  share  of  the  total  annual  product. 

I  name  a  particular  rate  of  interest  in  this  connection  only  as 
a  matter  of  convenience  in  illustration.  The  rate  that  ought  to 
be  adopted  should  be  a  matter  of  independent  consideration. 

No  other  limitations  of  general  character  would  be  required. 
There  are  some  special  limitations  to  be  hereafter  considered. 


320  THE  DISTEIBUTION  OF  WEALTH. 

The  objections  to  the  scheme  here  suggested  are  embraced  in 
the  following  propositions : 

First,  capital  would  be  deprived  of  its  equitable  share  of 
profits. 

Second,  production  would  fall  off,  because  capital  would  be 
withdrawn. 

Third,  a  low  rate  of  profit  would  not  induce  people  to  save. 

I  am  able  to  conceive  of  no  objection  which  might  be  urged 
other  than  those  here  stated. 

To  the  first  objection,  the  other  chapters  of  this  book  furnish 
such  answer  as  I  have  to  make. 

As  to  the  second,  how  can  railways  be  withdrawn  ?  how  can 
factories,  mills,  and  tools  be  withdrawn  ?  If  credits  are  with- 
drawn, the  amount  must  be  invested  in  other  industries, — in 
other  words,  in  production,  under  direct  control  of  the  owners  of 
capital.  The  only  way  capital  can  be  withdrawn  from  an  industry 
is  to  transfer  it  from  one  industry  or  subject-matter  to  another. 
It  may  take  the  form  of  credits ;  but  credits  represent  capital 
invested  in  tangible  property.  When  one  industry  is  depressed, 
or  is  relatively  unprofitable,  capital  may  be  withdrawn  to  an- 
other industry,  but  it  cannot  be  withdrawn  into  the  air;  a 
withdrawal  of  capital  means  a  transfer  of  capital  to  another 
form  of  investment.  A  measure  which  affects  all  industries 
alike  can  have  no  tendency  to  drive  capital  from  one  industry 
to  another.  If  any  one  should  imagine  that  capitalists  might 
convert  the  thirty  or  thirty-five  billions  of  productive  capital  in 
this  country  into  money,  and  lock  it  up  in  the  banks,  it  is  only 
necessary  to  remember  that  the  total  amount  of  money  in  the 
United  States  is  only  $1,405,018,000. 

If  the  profits  of  capital  were  less,  capitalists,  who  cannot 
escape  the  expenses  of  living,  would  be  under  the  necessity  of 
keeping  their  capital  stiU  more  actively  employed  that  their 
incomes  might  be  increased. 

As  to  the  third  objection, — it  is  the  objection  urged  by  writers 
on  political  economy, — John  Stuart  Mill  says,  "  There  would  be 
adequate  motives  for  a  certain  amount  of  saving,  even  if  capital 
yielded  no  profit.  There  would  be  an  inducement  to  lay  by  in 
good  times  a  provision  for  bad ;  to  reserve  something  for  sick- 
ness and  infirmity,  or  as  a  means  of  leisure  and  independence  in 


THE  DISTRIBUTION  OF  WEALTH.  321 

the  latter  part  of  life,  or  a  help  to  children  in  the  outset  of  it. 
Savings,  however,  which  have  only  these  ends  in  view  have  not 
much  tendency  to  increase  the  amount  of  capital  permanently 
in  existence.  These  motives  only  prompt  persons  to  save  at 
one  period  of  life  what  they  propose  to  consume  at  another,  or 
what  will  be  consumed  by  their  children  before  they  can  com- 
pletely provide  for  themselves.  The  savings  by  which  an  addi- 
tion is  made  to  the  national  capital  usually  emanate  from  the 
desire  of  persons  to  improve  what  is  termed  their  condition  in 
life,  or  to  make  provisions  for  children  and  others  independent 
of  their  exertions.  Now,  to  the  strength  of  these  inclinations, 
it  makes  a  very  material  diiference  how  much  of  the  desired 
object  can  be  effected  by  a  given  amount  and  duration  of  self- 
denial  ;  which  again  depends  on  the  rate  of  profit.  And  there 
is  in  every  country  some  rate  of  profit  below  which  persons  in 
general  will  not  find  sufficient  motive  to  save  for  the  mere  jDur- 
pose  of  growing  richer,  or  of  leaving  others  better  off  than 
themselves.  Any  accumulation,  therefore,  by  which  the  general 
capital  is  increased  requires,  as  its  necessary  condition,  a  cer- 
tain rate  of  profit ;  a  rate  which  an  average  person  will  deem  to 
be  an  equivalent  for  abstinence,  with  the  addition  of  a  sufficient 
insurance  against  risk.  There  are  always  some  persons  in  whom 
the  effective  desire  of  accumulation  is  above  the  average,  and 
to  whom  less  than  this  rate  of  profit  is  a  sufficient  inducement 
to  save ;  but  these  merely  step  into  the  place  of  others  whose 
taste  for  expense  and  indulgence  is  beyond  the  average,  and 
who,  instead  of  saving,  perhaps,  even  dissipate  what  they  have 
received." 

Further  on  he  says,  "A  profit  or  interest  of  three  or  four 
per  cent,  is  as  sufficient  a  motive  to  the  increase  of  capital  in 
England  at  the  present  day  as  thirty  or  forty  per  cent,  in  the 
Burmese  empire,  or  in  England  at  the  time  of  King  John.  In 
Holland,  during  the  last  century,  a  return  of  two  per  cent,  on 
government  security  was  consistent  with  an  undiminished,  if 
not  with  an  increasing,  capital." 

In  a  work  recently  published,  entitled  "  Premises  of  Political 
Economy,"  by  Patten,  I  find  the  following  enigmatic  declara- 
tion :  "  Both  a  high  rate  of  interest  and  high  wages  are 
necessary  to  preserve  a  high  standard  of  life,  and  any  plan  of 

21 


322  THE  DISTRIBUTION   OF  WEALTH. 

social  improvement  which  would  secure  a  high  rate  of  wages  by 
lowering  interest  is  defective.  A  reduction  of  the  rate  of  inter- 
est can  only  be  accomplished  by  such  a  diminution  of  the  in- 
ducement to  save  as  will  cause  all  capital  to  be  concentrated  in 
the  hands  of  a  few  persons.  A  class  of  laborers  who  do  not  save 
for  themselves  will  always  be  so  deficient  in  intelligence  as  to 
lack  those  qualities  necessary  to  maintain  high  wages,  and  they 
will  necessarily  sink  to  as  low  a  social  level  as  the  surrounding 
natural  conditions  will  allow.  What  is  needed  is  that  every 
one  be  required  to  do  his  part,  and  that  each  should  obtain  the 
whole  reward  which  nature  gives  for  labor  and  abstinence.  So 
long  as  interest  is  low,  and  cheap  labor  is  allowed  to  compete 
with  skilled  labor,  the  benefit  of  low  interest  does  not  come  to 
the  laborers,  nor  that  of  cheap  labor  to  the  capitalist ;  but  the 
loss  of  both  classes  goes  to  the  landlords,  who  reap  all  the  bene- 
fits of  low  interest  and  cheap  labor,  no  one  receiving  the  whole 
of  that  reward  which  nature  offers  to  those  who  save  and  those 
who  labor.  If  intelligent  laborers,  who  would  save,  had  only  to 
compete  with  the  ignorant,  who  would  not,  the  former  could 
win  in  the  contest  everywhere;  it  is  only  when  the  latter  are 
reinforced  by  low  interest  that  they  obtain  the  victory." 

The  evidence  that  this  is  a  bit  of  German  metaphysics,  with 
lucid  intervals,  does  not  need  the  corroborating  testimony  of  the 
dedication  of  the  book,  from  which  we  learn  that  Mr.  Patten 
was  a  student  of  Dr.  Johannes  Conrad  in  the  university  at 
Halle.  German  metaphysics  is  the  art  of  mounting  common 
ideas  in  stained-glass  cases,  and  exhibiting  them  by  moonlight. 

What  Mr.  Patten  seems  to  say,  in  the  first  sentences  of  the 
quotation,  in  which  he  declares  for  both  high  wages  and  a  high 
rate  of  interest,  is  that  the  yard  of  product  should  be  cut  into 
two  large  pieces,  so  as  to  give  three-quarters  of  a  yard  to  the 
laborer  for  his  wages,  and  one-half  a  yard  to  the  capitalist  for 
his  profits ;  but  I  am  disposed  to  acquit  the  author  of  an  in- 
tention to  make  such  violent  assault  on  an  inoftensive  rule  of 
division.  What  he  means  to  say  is,  I  presume,  that  if  the  price 
of  manufactured  products  is  relatively  reduced,  the  price  of 
agricultural  products  will  remain  relatively  high.  Since  the 
landlords  have  a  monopoly  in  the  ownership  of  land,  the 
agricultural  product  is  a  limited  quantity,  and  therefore  the 


THE  DISTRIBUTION  OP  WEALTH.  323 

benefit  of  low  prices  in  manufactured  products  will  accrue  to 
the  owners  of  land,  for  the  reason  that  they  will  be  able  to  pur- 
chase a  greater  quantity  with  the  same  quantity  of  their  own 
products.  So  stated,  it  is  an  argument  in  favor  of  applying 
legislative  limitations  to  the  ownership  of  land,  the  force  of 
which  I  admit.  But  the  theory  that  capitalists  should  continue 
to  rob  labor  by  means  of  excessive  profits  on  capital,  since  if 
they  do  not  do  so  the  landlords  will,  is  the  political  economy  of 
freebooters  and  pirates. 

The  position  of  Mill,  plainly  stated,  is  that  if  people  who  save 
a  part  of  their  own  earnings  cannot,  by  the  device  of  interest 
or  profits,*acquire  a  part  of  the  earnings  of  other  people,  they 
will  not  have  the  necessary  encouragement  to  save  at  all,  except 
to  meet  the  pressing  necessities  of  sickness  and  age,  and  the 
support  of  helpless  children.  But,  if  people  generally  were  to 
save  so  much,  the  aggregate  savings  of  the  coimtry  would  not 
be  less  than  they  now  are.  Mr.  Mill  appears  to  overlook  the 
important  fact  that  increasing  the  power  of  capitalists  to  save 
diminishes,  in  like  ratio,  the  power  of  laborers  to  save.  Only 
so  much  of  the  total  product  may  be  saved ;  the  more  capital 
gets  the  less  labor  retains.  That  it  is  important  that  there 
should  exist  inducement  to  save  must  be  admitted.  But  who 
most  needs  encouragement,  the  capitalist  or  the  working-man  ? 
Is  it  he  who  is  beginning,  and  who  is  without  money  to  loan, 
or  capital  to  invest,  or  a  house  to  live  in,  who  needs  aid  and 
encouragement  in  his  effort  to  save,  or  he  who  has  houses  and 
lands  and  money  to  loan  ?  The  question  is.  Shall  the  policy  of 
the  law  be  such  as  to  place  in  the  way  of  labor  the  opportunity 
to  save  its  own  earnings,  or  to  give  to  capital  the  power  of 
absorbing  them  ? 

The  chief  difficulties  to  bo  overcome  in  the  way  of  saving 
lie  at  the  beginning;  it  is  the  struggling  poor  who  need  the 
encouragement  of  better  wages.  Lower  rates  of  interest,  lower 
profits,  make  it  easier  for  the  working-man  to  save,  and  the  best 
encouragement  that  can  be  given  is  opportunity. 

Accumulations  of  capital  are  discouraged  by  the  disorganized 
conditions  of  society,  prevalent  in  semicivilized  countries, 
which  take  away  the  protection  of  law,  and  expose  property  to 
the  dangers  of  robbery  or  confiscation ;  but  I  know  of  no  in- 


324  THE  DISTKIBUTION   OF  WEALTH. 

stance  in  modern  history,  in  a  civilized  community,  where  prop- 
erty is  secure,  of  the  development  of  a  disposition  on  the  part  of 
the  owners  of  capital  to  consume  their  whole  income,  and  cease 
to  save,  because  they  could  not  save  rapidly.  On  the  other 
hand,  I  believe  the  statement  will  be  borne  out  by  general  ob- 
servation that  the  disposition  of  the  wealthier  classes  in  the 
direction  of  economy  and  providence  grows  as  their  incomes 
diminish.  The  popular  idea,  embodied  in  the  vulgar  proverb, 
"  Come  easy,  go  easy,"  expresses  a  truth  of  economic  science  that 
eminent  authors  seem  to  have  overlooked. 

But  Mr.  Mill  answers  his  own  argument  by  citing  the  case  of 
Holland,  where  he  says  that,  "  during  the  last  century,  a  return 
of  two  per  cent,  on  government  security  was  consistent  with  an 
undiminished,  if  not  with  an  increasing,  capital."  The  theory  that 
a  high  rate  of  interest  is  necessary  in  order  to  induce  people  to 
save  rests  wholly  on  a  priori  assumption.  It  has  not  been  verified 
by  the  history  of  any  people,  and  has  seldom  been  put  to  the 
test  of  experience.  It  is  merely  the  formula  for  the  defence  of 
existing  conditions  which  it  is  t(^  the  interest  of  a  class  to 
maintain.  It  is  quite  to  be  expected  that  writers  on  the  subject 
of  political  economy  should  assume  that  the  industrial  condi- 
tions by  which  they  are  surrounded,  and  which  prevail  through- 
out all  nations,  rest  on  sound  principles  of  economic  science. 
Slavery,  serfdom,  feudalism  in  their  day  prevailed.  They  were 
condemned  when  the  march  of  civilization  had  left  them  behind. 
Civilization  continues,  as  it  has  done  throughout  the  ages,  to 
present  the  spectacle  of  the  masses  of  mankind  slowly  strug- 
gling upward,  nearer  and  nearer,  to  the  level  on  which  stand  the 
more  favored  classes  of  society.  Every  proposed  advance  is 
condemned  beforehand  and  applauded  afterwards.  Orthodox 
maxims  of  political  economy  may  keep  them  in  line,  but  cannot 
long  retard  their  advance.  Patiently,  slowly,  and  steadily  they 
move  forward,  hindered  and  delayed  sometimes  by  an  army  of 
conventional  ideas  and  doctrines  intrenched  behind  statutes  and 
constitutions  and  venerable  customs ;  but  they  never  surrender 
nor  turn  back. 

As  to  other  limitations  :  The  pressure  of  the  interest  of  the 
owners  of  capital,  in  the  direction  of  constantly-diminishing 
wages  to  the   working-man,   is  met  by  resisting   tendencies 


THE  DISTRIBUTION  OF  WEALTH.  326 

springing  out  of  the  desires  and  the  interests  of  the  working- 
classes,  aided  by  education,  custom,  and  the  common  instincts  of 
justice,  which  assert  themselves  with  increased  vigor  as  they 
gather  strength  from  improved  social  and  moral  conditions. 
The  maxim,  that  wages  are  regulated  by  the  law  of  supply  and 
demand,  is  subject  to  many  qualifications  and  partial  exceptions, 
which  may,  perhaps,  be  considered  as  embraced  within  the  rule 
when  liberally  interpreted,  but  do  not  lie  within  the  scope  of 
its  direct  meaning. 

For  instance,  the  supply  of  carpenters,  painters,  masons,  and 
other  artisans  is,  on  the  average,  in  excess  of  the  demand.  This 
excess  is,  perhaps,  proportionately  as  great  as  that  of  the 
number  of  domestic  servants  in  excess  of  the  demand  for  the 
service  of  persons  of  that  class  ;  and  yet  wages  of  artisans  are, 
in  general,  three  or  four  times  as  high.  To  say  that  the  services 
of  the  latter  are  three  times  as  valuable  as  the  former  is  only 
another  form  of  saying  that  they  bring  three  times  as  much  in 
the  market.  The  true  reason  will  be  found  in  the  higher 
average  intelligence  and  consequent  superior  social  position  of 
artisans  as  a  class,  and  in  the  independence  and  self-assertion 
growing  out  of  these  conditions,  as  well  as  the  general  recogni- 
tion of  the  claims  of  superior  industrial  skill  to  more  than  an 
average  share  of  the  rewards  of  labor. 

Wages  in  the  lower  forms  of  industry  will  always  be  rela- 
tively low ;  the  result  of  the  competition  of  the  ignorant,  the 
dependent,  and  that  large  class  of  persons  whose  coarser  physi- 
cal needs  constitute  the  measure  of  their  demands.  Illustrations 
of  this  truth  may  be  found  on  every  hand  ;  and  in  special  illus- 
tration the  low  intellectual  condition,  and  the  correspondingly 
low  wages,  of  the  common  laborers  in  the  Southern  States  of 
the  Union  may  be  cited.  The  wages  of  those  engaged  in  agri- 
culture in  Georgia,  North  Carolina,  South  Carolina,  Alabama, 
and  Mississippi,  during  a  series  of  years,  average  not  more  than 
one-half  the  wages  of  the  same  class  of  laborers  in  the  New 
England  States. 

The  education  of  the  masses  must  be  recognized  as  one  of  the 
most  effective  remedies  for  low  wages. 


326  THE  DISTRIBUTION  OF  WEALTH. 


LABOR   COMBINATIONS   AND   STRIKES. 

The  demands  of  workers  for  higher  wages,  everywhere  opera- 
tive, and  in  a  measure  effective,  if  not  to  secure  an  advance,  at 
least  to  retard  reduction,  often  take  on  the  form  of  violent 
assertion  in  strikes.  That  labor  strikes  are,  in  a  measure, 
effective  is  shown  by  carefully-collected  statistics. 

In  Illinois,  during  the  years  from  1881  to  1886,  inclusive,  there 
were  1805  strikes,  or  65.2  per  cent,  of  the  whole  number  of 
strikes  during  that  period,  whose  object  was  to  secure  an  in- 
crease of  wages.  Of  these,  1215,  or  67.3  per  cent.,  are  recorded 
as  successful.  There  were  580  strikes  for  the  reduction  of  the 
hours  of  labor ;  of  these,  167,  or  29  per  cent.,  succeeded.  The 
success  of  strikes  in  Illinois  is  a  fair  average  of  the  success  of 
strikes  throughout  the  country  during  the  same  period,  66  per 
cent,  of  which  were  successful.  The  success  of  these  strikes  is 
not  the  full  measure  of  the  power  of  organization  to  maintain 
wages.  The  mere  fact  of  organization  stands  in  the  way  of 
reduction,  and  often  compels  an  increase  without  resort  to 
extreme  measures. 

The  loss  of  wages  sustained  by  the  seventeen  thousand  nine 
hundred  and  twenty-two  pei*sons  who  engaged  in  the  successful 
strikes  amounted  to  $286,472,  and  the  gain  was  an  average  in- 
crease of  twenty-six  cents  per  day.  In  the  partially-successful 
strikes,  involving  three  thousand  three  hundred  and  three  men, 
there  was  an  aggregate  wage-loss  of  $125,674.  In  the  range  of 
the  United  States,  in  successful  and  partially-successful  strikes, 
involving  two  hundred  and  two  thousand  eight  hundred  and 
eight  workers,  the  direct  wage-loss  was  $5,921,151.  This  estimate 
does  not  include  losses  from  unsuccessful  strikes,  idle  machinery, 
or  indirect  losses.  While  it  will  be  seen  that  labor  organizations 
and  strikes  may  not  be  without  value  as  a  remedy  for  low  wages, 
they  constitute  an  unsatisfactory  and  expensive  remedy. 

When  wages  are  advanced  by  measures  of  this  character, 
capital  maintains  its  margin  of  profit  by  demanding  higher 
prices  for  products,  and,  in  the  end,  the  burden  of  the  increase 
of  wages  in  one  industry  is  borne  by  the  workers  at  large  in  the 
form  of  higher  prices  for  the  commodities  which  they  consume. 
Labor  only  shifts  his  load  on  to  the  other  shoulder.    These 


THE  DISTRIBUTION   OF  WEALTH.  327 

organized  efforts  for  the  advance  of  wages  do,  in  the  end,  no 
doubt  result,  in  some  degree,  in  lowering  the  margin  of  profits ; 
but  they  are,  in  the  main,  but  long-range  contests  between 
different  classes  of  labor,  in  which  unorganized  labor,  being  at 
the  greatest  disadvantage,  suffers  the  loss  of  what  is  gained  by 
other  classes.  The  Knight  of  Labor  gets  a  more  generous  allow- 
ance, but  Hodge  goes  hungry. 

The  total  amount  of  wages  falls  within  fixed  limits.  An 
increase  of  wages  in  all  departments  of  industry  means  simply 
an  increase  in  the  prices  of  the  products  of  all  industries,  and 
nothing  is  gained  except  that  products  at  ahigh  price  go  further 
in  the  discharge  of  existing  debts.  An  increase  of  wages  in  one 
industry  advances  the  price  of  the  products  of  that  industry  to 
the  people  in  general,  to  the  advantage  of  a  class  of  workers. 

Let  us  assume  that  the  total  product  is  equivalent  to  100,  and 
that  of  this  product  eighty  per  cent,  goes  to  labor  and  twenty 
per  cent,  to  capital ;  that  the  share  of  labor  is  divided  as  follows: 
twenty  per  cent,  to  agricultural  workers,  twenty  per  cent,  to 
workers  in  manufacturing  industries,  twenty  per  cent,  to  me- 
chanics, miners,  clerks,  railway  employes,  etc. ;  ten  per  cent,  to 
day  laborers,  and  ten  per  cent,  to  personal  service  and  profes- 
sional classes.  Now,  suppose  that  the  wages  of  agricultural 
workers  be  increased,  so  that  they  shall  receive  thirty  per  cent, 
of  the  entire  product,  from  what  source  will  this  additional  ten 
per  cent,  be  drawn  ?  A  very  small  proportion,  if  any,  will  be 
drawn  from  the  share  of  capital.  The  owners  of  capital  will 
pay  more  for  meat  and  flour,  but  prices  of  commodities  handled 
by  capital  will  be  advanced,  and  rents  and  interest  will  rise. 
The  great  body  of  working-people  will  pay  more  for  the  products 
of  agriculture,  and,  though  their  wages  may  remain  as  before, 
by  reason  of  higher  prices  for  what  they  buy  their  shares 
of  the  total  product  will  be  reduced,  so  that  the  ratio  will  stand  : 

Per  cent. 

Agricultural  workers 30.00 

Manufacturing     "       16.33 

Meclianics,  etc.,  "       16.33 

Personal  service  classes 8.66 

Day  laborers 8.66 

Capital 20.00 

Total •  • 100.00 


328  THE  DISTRIBUTION   OF  WEALTH. 

If  the  wages  of  workers  in  manufacturing  industries  be  in- 
creased in  like  proportion,  the  wages  of  other  classes  remaining 
the  same,  the  ratio  will  stand : 

Per  cent. 

Agricultural  workers 16.33 

Manufacturing     "      30.00 

Mechanics,  etc.,    "      16.33 

Personal  service  classes 8.66 

Day  laborers 8.66 

Capital 20.00 

Total 100.00 

The  changes  in  ratio  would  not  correspond  with  any  definite 
mathematical  exhibit  which  can  be  made,  for  the  reason  that 
the  consumption  of  different  classes  is  affected  in  different  de^ 
grees  by  a  rise  or  fall  in  prices.  The  problem  is  a  complex  one. 
I  have  merely  sought  to  illustrate  a  governing  principle  in  the 
division  of  the  total  product  among  different  classes  of  workers, 
and  to  show  the  effect  of  an  increase  in  wages" of  one  class  of 
workers  upon  the  wages  of  other  classes. 

If  we  increase  the  money  wages  of  all  classes  of  workers  by 
an  addition  of  twenty  per  cent.,  the  result  as  compared  with 
former  wages  will  be  as  follows  : 

Per  cent. 

Agricultural  workers 24.00 

Manufacturing     *<       24.00 

Mechanics,  etc.,   "       24.00 

Personal  service  classes 12.00 

Day  laborers 12.00 

Capital 24.00 

Total 120.00 

An  increase  in  wages  without  increase  of  quantity  of  product 
means  a  corresponding  increase  of  prices.  The  total  product, 
measured  in  money,  would  be  increased  in  like  ratio,  and  the 
relative  share  of  capital  would  remain  the  same.  The  total 
product,  though  not  changed  in  quantity,  measured  in  money, 
instead  of  remaining  at  100,  would  then  be  represented  by  120. 

The  only  advantage  gained  by  labor  would  be  that  existing 
credits,  as  measured  by  the  value  of  commodities,  would  depre- 
ciate, and  what  was  100  before  the  rise  would  be  83 J  after  the 


THE  DISTRIBUTION  OP  WEALTH.  329 

rise,  since  one  hundred  dollars  would  purchase  only  83^^  per 
cent,  of  the  product  which  it  would  have  purchased  before  the 
advance  in  prices. 

Let  us  examine  further  the  effects  of  an  advance  in  wages  of 
a  class  of  workers.  Take  for  illustration  the  artisans  in  the 
building  trades.  If  the  wages  of  carpenters  and  masons  be  in- 
creased there  will  be  less  building,  and  a  smaller  number  of 
families  of  limited  means  will  be  able  to  secure  homes  of  their 
own,  and  rents  will  be  maintained  or  advanced  to  the  ad- 
vantage of  capital,  and  building  being  restricted,  artisans  them- 
selves, while  securing  higher  wages  for  the  work  they  do,  will 
do  less  work,  the  total  product  will  be  correspondingly 
diminished,  and  the  share  of  the  workers,  as  a  whole,  will  be 
less. 

What  is  required  is  not  an  increase  in  the  rate  of  wages  of 
any  class  of  workers  whose  wages  are  already  relatively  as  high 
as  the  wages  of  other  classes,  but  the  adjustment  to  a  fair  and 
equitable  standard  of  wages,  interest,  rents,  and  profits  in  trade. 

When  wages  are  so  adjusted  that,  in  the  various  occupations, 
they  are  relatively  equitable  and  just,  an  increase  of  the  wages 
of  one  class  of  workers  is  secured  chiefly  at  the  expense  of 
other  classes ;  capital  takes  care  of  itself. 

In  these  wage-contests  the  classes  who  suffer  most  are  the 
agricultural  classes,  day  laborers,  and  workers  in  those  indus- 
tries where  special  skill  is  not  required,  and  where  the  number 
seeking  employment  is  greater  than  the  demand. 

As  an  organized  force  capital  is  far  more  effective  than  labor. 
While  the  workers  are  numbered  by  the  million,  capitalists  are 
counted  only  by  hundreds  or  thousands.  Large  amounts  of 
capital  owned  by  many  individuals  are  employed  under  the 
management  of  a  single  representative  or  a  board  of  directors ; 
interests  are  readily  combined.  An  intelligent  understanding 
of  mutual  interests  enables  a  small  number  of  capitalists  oper- 
ating together  to  maintain  their  profits  against  the  disconcerted 
efforts  of  large  numbers  of  workers  to  whom  effective  organiza- 
tion is  impracticable. 

Adam  Smith,  writing  upon  this  subject,  says,  "We  rarely 
hear,  it  has  been  said,  of  the  combinations  of  masters,  though 
frequently  of  those  of  workmen.    But  whoever  imagines  upon 


330  THE  DISTRIBUTION  OF  WEALTH. 

this  aocount  that  masters  rarely  combine,  is  as  ignorant  of  the 
world  as  of  the  subject.  Masters  are  always  and  everywhere 
in  a  sort  of  tacit,  but  constant  and  uniform,  combination  not  to 
raise  the  wages  of  labor  above  their  actual  rate.  To  violate 
this  combination  is  everywhere  a  most  unpopular  action,  and  a 
sort  of  reproach  to  a  master  among  his  neighbors  and  equals. 
We  seldom  indeed  hear  of  this  combination,  because  it  is  the 
usual,  and  one  may  say  the  natural,  state  of  things,  which 
nobody  hears  of  Masters,  too,  sometimes  enter  into  particular 
combinations  to  sink  the  wages  of  labor  even  below  this  rate. 
They  are  conducted  with  the  utmost  silence  and  secrecy  till  the 
moment  of  execution ;  and  when  the  workmen  yield,  as  they 
sometimes  do  without  resistance,  though  severely  felt  by  them, 
they  are  never  heard  of  by  other  people.  Such  combinations, 
however,  are  frequently  resisted  by  a  contrary  defensive  combi- 
nation of  the  workmen,  who  sometimes,  too,  without  any  provo- 
cation of  the  kind,  combine  of  their  own  accord  to  raise  the 
price  of  their  labor.  Their  usual  pretences  are,  sometimes  the 
high  prices  of  provisions,  sometimes  the  great  profit  which  their 
masters  make  of  their  work.  But  whether  their  combinations 
be  offensive  or  defensive,  they  are  always  abundantly  heard  of. 
In  order  to  bring  the  point  to  a  speedy  decision  they  have 
always  recourse  to  the  loudest  clamor,  and  sometimes  to  the 
most  shocking  violence  and  outrage.  They  are  desperate,  and 
act  with  the  folly  and  extravagance  of  desperate  men,  who  must 
either  starve  or  frighten  their  masters  into  an  immediate  com- 
pliance with  their  demands.  Their  masters,  upon  these  occa- 
sions, are  just  as  clamorous  upon  the  other  side,  and  never  cease 
to  call  aloud  for  the  assistance  of  the  civil  magistrate,  and  the 
vigorous  execution  of  those  laws  which  have  been  enacted  with 
so  much  severity  against  combinations  of  servants,  laborei'^,  and 
journeymen.  The  workmen,  accordingly,  very  seldom  derive 
any  advantage  from  the  violence  of  those  tumultuous  combina- 
tions, which,  partly  from  the  interposition  of  the  civil  magis- 
trate, partly  from  the  superior  steadiness  of  the  masters,  partly 
from  the  necessity  which  the  greater  part  of  the  workmen  are 
under  of  submitting  for  the  sake  of  present  subsistence,  gen- 
erally end  in  nothing  but  the  punishment  or  ruin  of  the  ring- 
leaders." 


THE  DISTRIBUTION  OF   WEALTH.  331 

But  labor  organizations  are  more  powerful  and  effective  now 
than  in  the  time  of  Adam  Smith.  It  cannot  be  said  that  they 
now  end  in  nothing  but  the  punishment  or  ruin  of  the  ring- 
leaders. They  very  often  accomplish  the  objects  at  which  they 
aim.  They  are  able  to  secure  an  advance  of  wages  and  shorter 
hours ;  but  they  push  up  prices  along  with  wages,  and  the 
advantages  gained  by  one  class  of  workers  are  mainly  at  the 
expense  of  other  classes  of  workers.  They  do  not  prevent,  if 
indeed  they  even  check,  the  aggregation  of  wealth.  These  labor 
contests  not  only  suspend  industry  for  the  time  being,  but 
greatly  hindering  the  regular  movement  of  production  and  dis- 
tribution, they  make  employment  more  irregular  and  uncertain, 
diminish  the  total  product,  and  thereby  reduce  wages. 

When  the  wages  of  miners  are  advanced,  the  price  of  coal 
advances  also ;  the  price  of  iron  responds  to  advance  of  wages 
in  the  iron  industries ;  and  the  price  of  the  product  in  all  indus- 
tries, where  labor  is  hired  by  capital,  keeps  well  in  front.  A 
man  cannot  outrun  his  own  face,  nor  can  wages  overtake 
prices. 

One  class  of  laborers  may  secure  substantial  advantages  by 
means  of  organization  and  strikes,  but  chiefly  at  the  expense  of 
the  workers  at  large,  and  particularly  of  unskilled  laborers. 

In  the  United  States,  during  the  six  years  from  1881  to  1886, 
inclusive,  there  were  two  hundred  and  fifteen  strikes  against  the 
employment  of  non-union  men,  and  one  hundred  and  sixty-seven 
lock-outs  against  the  demand  for  the  observance  of  union  appren- 
tice rules.  And  recently  the  green-glass  blowers  have  expended 
two  hundred  and  fifty  thousand  dollars  in  a  protracted  strike, 
the  purpose  of  which  was  to  limit  the  number  of  apprentices  in 
each  factory  to  two  for  any  one  year. 

In  the  time  of  Adam  Smith  the  various  trades  were  generally 
in  the  hands  of  corporations,  and  the  term  of  apprenticeship  as 
well  as  the  number  of  apprentices  was  regulated  by  by-laws  of 
these  corporations.  The  statute  of  apprenticeship,  5th  Eliza- 
beth,  which  was  construed  to  apply  to  market  towns  only, 
provided  that  no  person  should  exercise  any  trade,  craft,  or 
mystery  at  that  time  exercised  in  England  unless  he  had  pre- 
viously served  to  it  an  apprenticeship  of  seven  years.  The  silk- 
weavers  of  London  enacted  a  by-law  prohibiting  any  master 


332  THE  DISTRIBUTION  OF  WEALTH. 

from  having  more  than  two  apprentices  at  a  time.  The  cutters 
of  London  limited  the  number  to  one  apprentice  at  a  time  to 
each  master-cutter.  No  master-hatter  could  have  more  than 
two  apprentices  anywhere  in  England. 

On  the  Continent,  seven  years  was  the  usual  term  fixed  for 
the  duration  of  apprenticeships.  In  Paris,  five  years  was  the 
term  required  in  many  trades. 

The  principal  object  of  this  long  term  of  apprenticeship  was 
to  restrict  the  number  of  artisans  by  adding  to  the  expense  and 
the  time  required  in  acquiring  a  trade.  The  purpose  and  the 
effect  of  the  general  policy  pursued  was  to  restrict  competition. 

The  law  no  longer  seeks  by  means  of  onerous  restrictions  to 
limit  industrial  education,  or  to  confer  upon  any  industrial  class 
the  advantages  of  a  monopoly.  But  trades  unions,  labor  organi- 
zations, and  the  general  disposition  to  promote  individual  inter- 
ests at  the  expense  of  the  public  are  still  operative  and  effective 
in  limiting  industrial  education,  restricting  production,  and 
denying  to  many  those  opportunities  which  should  be  open  as 
common  privileges  to  all  working-men.  Strikes  which  have  for 
their  purpose  the  restriction  of  the  number  of  apprentices  or 
the  exclusion  of  any  working-man  from  the  privilege  of  pursuing 
any  industry  he  may  choose  should  be  prohibited  as  criminal 
conspiracies.  Strikes  in  general  have  had  the  excuse  of  a  legiti- 
mate purpose,  and  no  doubt  have  frequently  accomplished  much 
good ;  but  when  strikes  are  organized  by  any  class  of  working- 
men  for  the  purpose  of  advancing  their  own  interests  at  the 
expense  of  the  weaker  members  of  society,  and  appropriating 
to  themselves  the  special  advantages  which  the  monopoly  of 
any  industry  is  supposed  to  confer,  they  are  not  only  destruc- 
tive of  the  public  welfare,  but  they  are  in  direct  subversion  of 
private  rights,  and  cannot  be  justified  according  to  any  principle 
of  economic  or  moral  law. 

It  should  be  the  policy  of  the  state  to  encourage  industrial 
education,  and  to  this  end  technical  schools  should  be  estab- 
lished and  maintained  at  public  expense.  The  advantages  of 
such  schools  should  not  be  restricted  to  those  who  may  have  the 
means  and  disposition  to  pursue  an  elaborate  course  of  study ; 
the  purpose  should  be,  rather,  to  widen  the  opportunities  and 
stimulate  the   ambition  of   the  masses  of  the  people   while 


THE  DISTRIBUTION  OF  WEALTH.  333 

affording  special  facilities  to  such  as  may  seek  a  high  degree  of 
proficiency  in  any  art  or  calling. 

LIMITATIONS   BY   STATUTE  ON   RATE   OF  WAGES. 

So  far  we  have  considered  limitation^  upon  the  margin  of 
profit  interposed  by  the  force  of  economic  laws  and  legislative 
restrictions,  operating  for  the  most  part  indirectly  and  with 
uniform  effect  upon  the  profits  of  capital,  in  whatever  form  or 
industry  invested.  It  remains  to  consider  another  class  of 
limitations  by  means  of  legislative  law  operating  in  a  manner 
more  direct,  or  applied  to  particular  forms  of  industry. 

Attempts  have  been  made,  but  without  success,  except  in 
particular  instances,  or  under  special  conditions,  to  fix  by  law 
minimum  or  maximum  rates  of  wages  and  maximum  prices  of 
commodities.  One  reason  why  the  rate  of  wages  may  not  be 
prescribed  by  legal  enactment  is  that  the  value  of  the  product 
may  not  be  determined  beforehand  for  a  whole  state,  nor  for  a 
fixed  period  of  time,  and  wages  fixed  by  law  might  amount  to 
more  than  the  product  or  else  they  might  amount  to  so  much 
less  than  the  product  as  to  be  wholly  out  of  proportion  thereto, 
and  laborers  might  refuse  to  work  for  the  wages  allowed.  Both 
wages  and  profits  must  vary  somewhat  in  different  localities, 
and  in  different  years  and  different  seasons.  No  general  law 
could  be  framed  that  would  be  equitable  or  practicable.  Nor  is  it 
policy,  if  it  were  practicable,  by  arbitrary  enactments  to  attempt 
to  limit  the  free  play  of  social  forces  within  too  narrow  bounds. 
It  is  the  province  of  the  law  to  restrain  the  strong  and  to  assist 
the  weak,  but  not  to  impose  restraints  upon  individual  freedom 
that  may  not  be  fully  justified  by  public  necessity. 

Attempts  to  regulate  the  rate  of  wages,  and  also  the  price  of 
products,  were  not  infrequent  in  the  earlier  history  of  legislation 
in  England.*     Adam  Smith  says,  "  That  though  anciently  it 

*  "  Another  relic  of  mediaevalism  was  the  regulation  of  wages  by  justices 
of  the  peace,  a  practice  enjoined  by  the  Act  of  Elizabeth  already  referred  to. 
Adam  Smith  speaks  of  it  as  a  part  of  a  general  system  of  oppression  of  the 
poor  by  the  rich.  Whatever  may  have  been  the  case  in  some  instances,  this 
was  not  generally  true.  The  country  gentry  were  on  the  whole  anxious  to 
do  justice  to  the  working-classes.  .  .  .  The  justices  often  ordained  a  rise  in 
wages,  and  the  workmen  themselves  were  strongly  in  favor  of  this  method 


334  THE  DISTRIBUTION  OF  WEALTH. 

was  usual  to  rate  wages  first  by  general  laws  extending  over 
the  whole  kingdom,  and  afterwards  by  particular  orders  of  the 
justice  of  the  peace  in  every  particular  county,  both  these 
practices  have  now  gone  entirely  into  disuse."  "By  the  ex- 
perience of  above  four  hundred  years,"  says  Dr.  Burn,  "  it  seems 
time  to  lay  aside  all  endeavors  to  bring  under  strict  regula- 
tions what  in  its  own  nature  seems  incapable  of  minute  limita- 
tion ;  for  if  all  persons  in  the  same  kind  of  work  were  to  receive 
equal  wages  there  would  be  no  emulation,  and  no  room  left  for 
industry  or  ingenuity. 

"  Particular  acts  of  Parliament,  however,  still  attempt  some- 
times to  regulate  wages  in  particular  trades  and  in  particular 
places.  Thus,  the  8th  of  George  III.  prohibits,  under  heavy 
penalties,  all  master-tailors  in  London,  and  five  miles  round  it, 
from  giving,  and  their  workmen  from  accepting,  more  than  two 
shillings  and  seven  pence  half-penny  (sixty-three  cents)  a  day, 
except  in  case  of  a  general  mourning."  The  early  history  of 
New  England  discloses  legislation  of  similar  character.  There 
were  statutes  prescribing  the  prices  of  victuals,  drink,  and 
bread-stuffs.  A  meal  at  an  eating-house  was  six  pence,  and  one 
penny  additional  for  a  quart  of  beer.  A  statute  oF  Connecticut 
fixed  the  wages  of  carpenters,  plough wrights,  wheelwrights, 
masons,  joiners,  smiths,  coopers,  and  mowers  at  twenty  pence 
per  day  from  March  10  to  October  11,  and  eighteen  pence 
thereafter,  and  prescribed  eleven  hours  for  a  day's  work  in 
summer  and  nine  hours  in  winter.  The  w^ages  of  other  work- 
men were  fixed  at  two  pence  less.  In  Massachusetts  the  lawful 
hire  of  a  steer  was  nine  pence  per  day,  or  twelve  pence  for  a 
grown  ox ;  of  a  horse,  sixteen  pence.  Master-carpenters,  joiners, 
coopers,  bricklayers,  plasterers,  and  rivers  of  clapboards  were 
allowed  two  shillings  in  summer  and  twenty  pence  in  winter. 
Other  mechanics,  "experienced  and  diligent,"  were  allowed 
eighteen  pence  in  summer  and  fourteen  pence  in  winter.  In 
1650  the  prices  of  cereals  were  fixed  by  law  as  follows :  wheat, 
four  shillings  six  pence;   peas,  three  shillings  six  pence;   lye. 


of  fixing  them.  The  employers,  on  their  part,  also  often  approved  of  it.  In 
fact,  we  have  an  exactly  similar  system  at  the  present  day  in  boards  of 
arbitration." — IndustT^l  Revolution  of  the  Eighteenth  Century  in  England. 


THE  DISTRIBUTION  OF  WEALTH.  335 

three  shillings  six  pence ;  Indian  com,  throe  shillings, — all  per 
bushel. 

NATURAL   MONOPOLIES. 

In  many,  if  not  most,  of  the  States  there  are  still  in  force 
statutes  limiting  the  amount  of  toll  that  may  be  taken  for 
grinding  flour,  and  requiring  the  miller  to  assist  in  loading  and 
unloading.  The  limitation  by  law  of  the  amount  of  toll  before 
the  day  of  railways  was  justified  by  the  fact  that  flouring-mills 
were,  in  a  measure,  natural  monopolies.  One  mill  was  sufficient 
for  the  people  who  resided  within  convenient,  distance,  and 
mills  were  necessarily  too  far  apart  for  competition  to  have  its 
full  effect.  People  could  not  well  protect  themselves  from  over- 
charges by  driving  to  distant  mills,  since  the  expense  of  the 
longer  drive  would  exceed  the  amount  of  overcharge.  Legis- 
lative limitation  was  the  only  protection  adequate  to  prevent 
extortion.  And  the  cost  of  grinding  was  so  nearly  uniform 
throughout  the  country,  and  from  year  to  year,  as  to  present 
no  great  obstacle  to  the  application  of  a  maximum  limit  that 
would,  at  the  same  time,  leave  room  for  reasonable  profit  and 
protect  the  people  from  any  considerable  extortion.  When, 
however,  through  the  agency  of  railways,  mills  were  all  brought 
into  close  competition  with  one  another,  there  remained  no 
reason  for  legislative  restriction;  and  laws  regulating  toll  of 
flouring-mills,  though  still  carried  on  the  statute-books  of  many 
States,  are  no  longer  needed,  and  they  only  remain  from  neglect 
to  repeal  them.  They  have  become  inoperative  by  reason  of 
competition,  which  has  reduced  the  cost  of  grinding  below  the 
old  prices  and  confines  the  margin  of  varying  charges  within 
narrow  limits. 

The  limitation  of  charges  for  hack  fare  is  everywhere  recog- 
nized as  within  the  proper  scope  of  legislative  supervision.  Not 
because  of  any  lack  of  competition  among  hack-drivers,  since 
the  supply  has  always  been  in  excess  of  the  demand ;  but  people, 
if  inclined,  do  not  have  the  time  to  stipulate  beforehand  as  to 
hack  charges,  nor  will  they  protect  themselves  against  extortion 
by  disputing  a  fare,  at  the  risk  of  an  altercation  with  an  imper- 
tinent clown,  in  a  public  place.  In  this  case  the  chance  for 
extortion  grows  out  of  the  smallness  of  the  amount  involved  in 
any  one  transaction  and  the  frequent  recurrence  of  the  oppor- 


336  THE  DISTEIBUTION   OF   WEALTH. 

tunity,  the  necessary  lack  of  knowledge  on  the  part  of  the 
travelling  public  of  the  individuals  with  whom  they  are  com- 
pelled to  deal,  and  the  circumstances  of  time  and  place  which 
enable  those  disposed  to  take  advantage  to  enforce  extortionate 
charges.  Here  the  power  to  extort  money  beyond  a  reasonable 
compensation,  as  in  case  of  natural  monopolies,  arises  out  of  the 
peculiar  conditions. 

No  difficulty  is  here  found  in  applying  legislative  restrictions ; 
since,  although  the  effect  of  limiting  fares  is  to  reduce  the  num- 
ber of  hackmen,  the  number  that  survive  is  always  adequate  to 
the  demand. 

While  the  effect  of  limiting  fares  is  to  lessen  the  number  of 
those  who  engage  in  the  business,  the  compensation  of  those  who 
continue  is  not  reduced  ;  the  smaller  amount  which  is  paid  by 
the  travelling  public  is  divided  among  a  smaller  number,  the 
earnings  of  each  remaining  the  same. 

The  limitation  of  freight  charges  and  passenger  fares  on  rail- 
ways, and  of  fares  on  street  railways  and  ferry-boats,  is  founded 
on  the  public  necessity  of  restricting  charges  for  services  ren- 
dered by  natural  monopolies  which  are  not  fully  subject  to  the 
limiting  power  of  competition.  The  charges  of  telegraph  com- 
panies, telephone  companies,  and  gas  companies  are  embraced 
in  the  same  necessity,  and  ought  to  be,  and  will  be,  made  subject 
to  limitations  fixed  by  law ;  since  they  are  subject  to  none  other 
that  are  operative  within  the  range  of  gross  extortion. 

Here,  again,  no  great  difficulty  is  experienced.  The  volume 
of  business,  which  expresses  the  amount  of  the  total  product, 
varies  between  limits  that  may  be  readily  ascertained ;  so  that 
the  effect  of  a  proposed  limitation  of  rates  may  be  estimated 
with  approximate  accuracy.  It  will  be  observed  that  this  form 
of  legislative  restriction  involves  no  direct  limitation  of  either 
wages  or  profits. 

If,  in  addition  to  limitations  by  the  imposition  of  fixed  maxi- 
mum charges,  the  business  were  further  subject  to  the  varying 
limitations  imposed  by  competition  unrestricted  by  natural  con- 
ditions, capital  might  thereby  be  exposed  to  the  hazard  of  doubt- 
ful results,  from  which  it  would  be  restrained  from  protecting 
itself  by  expedients  permitted  in  the  management  of  other  busi- 
ness enterprises;  but  when  capital  is  invested  in  any  business 


THE  DISTRIBUTION  OF  WEALTH.  337 

beyond  the  range  of  effective  competition,  legislative  limitations 
of  the  character  imposed  on  the  charges  of  railway  companies 
and  similar  natural  monopolies  may  be  applied  without  endan- 
gering reasonable  profits ;  and  the  necessity  of  some  restriction 
in  cases  where,  without  legislation,  there  are  none,  fully  justifies 
the  imposition  of  legislative  restraints. 

PATENT  RIGHTS. 

Patent  rights  are  artificial  monopolies  created  by  law  for  the 
encouragement  of  invention.  As  a  reward  for  industry,  perse- 
verance, and  talent,  the  patentee,  in  the  event  of  success,  is 
assured  in  the  absolute  control  of  the  market  during  a  limited 
period  of  years.  It  may  be  that,  on  the  whole,  the  compensa- 
tion of  inventors  has  not  exceeded  a  reasonable  reward  for  ex- 
ceptional perseverance  and  talent.  But  the  monopoly,  designed 
for  the  benefit  of  inventors,  generally  falls  into  the  hands  of 
shrewd  capitalists,  who  have  done  little  to  give  them  title  to  it 
except  to  drive  a  hard  bargain  with  some  poor  inventor  who 
has  wasted  his  years  and  his  means  in  pursuit  of  a  possible  for- 
tune, which,  in  the  hour  of  his  success,  his  hard  necessities  com- 
pel him  to  relinquish  to  the  grasping  avarice  of  one  of  those 
whose  trade  it  is  to  thrive  on  the  misfortunes  of  others. 

The  law  is  deficient  in  two  things :  first,  in  such  provisions  as 
would  prevent  the  inventor  and  his  family  from  being  wholly 
deprived  of  the  royalty  of  his  own  invention,  even  by  his  own 
act ;  second,  in  not  protecting  the  people,  by  in  some  manner 
limiting  the  maximum  profits  which  may  be  derived  through 
any  patent.  The  extent  of  the  aggregation  of  wealth  through 
the  agency  of  patent-right  monopolies  cannot  be  ascertained; 
but  in  many  departments  of  manufacture  profits  have  been 
enormous.  No  other  single  agency  perhaps,  except  interest  on 
money,  is  more  responsible  for  the  present  inequitable  distribu- 
tion of  wealth.  The  wrong  done  to  the  masses  of  common 
people,  and  especially  to  the  agricultural  classes,  has  been  fla- 
grant and  gross  ;  and  yet  there  has  been  no  great  outcry  against 
it,  for  the  reason  that  the  people  have  never  understood,  nor  do 
they  now  understand,  that  great  profits  in  one  industry  mean  the 
robbing  of  some  to  build  the  fortunes  of  others ;  that  wealth  and 
poverty  are  correlative  conditions,  even  in  the  closing  decades 

22 


338  THE  DISTRIBUTION   OF  WEALTH. 

of  the  nineteenth  century,  when  the  power  to  produce  has  far 
outrun  the  power  to  consume,  and  the  workers  in  ouy  manu- 
facturing industries,  with  the  aid  of  machinery,  electricity,  and 
steam,  can,  in  one  day,  do  more  than  a  like  number  of  workers 
could  have  done  in  a  month,  eighty  years  ago. 

LIMITING   THE   RATE   OF   INTEREST  AND   THE   OWNERSHIP   OP   LAND. 

The  theory  that  a  reduction  of  the  rate  of  interest,  or  of 
profits  on  capital,  would  tend  to  the  aggregation  of  wealth, 
springs  from  a  mistaking  of  effect  for  cause.  It  is  true  that 
small  profits  and  small  accumulations  of  wealth  are,  as  a  rule, 
found  only  in  conjunction.  The  same  may  be  said  of  low  wages 
and  small  savings.  But  it  is  not  therefore  claimed  that  small 
savings  are  the  cause  of  low  wages.  On  the  other  hand,  it  is 
clear  that  low  wages  are  the  cause  of  small  savings.  So  it  is 
equally  plain  that  a  small  amount  of  general  savings,  or  a  small 
product  of  durable  property,  is  the  cause  of  both  a  low  rate  of 
interest  and  low  wages.  The  same  cause  which  reduces  the 
share  of  the  worker  reduces  the  portion  of  capital.  The  neces- 
sary efiect  of  lowering  profits  by  limiting  the  rate  of  interest 
is  not  to  reduce  the  total  savings  of  the  country,  but  to  bestow 
a  larger  share  upon  the  workers  in  the  form  of  wages,  or  the 
earnings  of  labor.  Thus  the  opportunity  to  save  would  be  dis- 
tributed among  a  greater  number  of  people,  and,  instead  of 
aggregating  wealth,  would  divide  it  among  those  who  create  it, 
and  who  are  entitled  to  enjoy  it.  At  present,  the  working-man 
who  saves  even  a  home  must  do  so  at  the  expense  of  a  degree 
of  self-denial  that  deters  many  from  the  effort,  and  defeats  many 
more  in  the  attempt. 

When,  by  extreme  self-denial,  shrewd  cunning,  or  by  lucky 
chance,  one  succeeds  in  accumulating  a  small  capital,  he  may 
then  climb  upon  the  necks  of  his  fellows  and  ride  into  fortune ; 
and,  if  he  succeeds,  the  world  applauds,  for  "  there  is  nothing 
like  success."  This  vulgar  maxim  is  the  plebeian  brother  of  the 
phrase  "  the  divine  right  of  kings,"  born  of  the  doctrine  enter- 
tained by  titled  nobles,  that  it  is  a  part  of  the  scheme  of  Prov- 
idence that  the  common  people  should  be  by  them  saddled  and 
ridden  at  will,  and  then  turned  out  like  donkeys  on  the  common, 
to  feed  and  renew  their  strength  for  the  morrow's  journey. 


THE  DISTBIBUTION  OP   WEALTH.  339 

The  equal  right  of  all  men  to  life,  liberty,  and  the  pursuit  of 
happiness  must  be  admitted  in  practice  as  well  as  theory  ;  and  it 
is  the  duty  of  every  government,  so  far  as  practicable,  to  pre- 
serve to  all  its  people  alike  an  equality  of  opportunity.  Its 
efforts  should  be  to  give  every  man  a  chance,  not  to  get  other 
people's  earnings,  but  to  keep  his  own;  and  to  see  that  the 
weak,  by  the  encroachments  of  the  strong,  are  not  deprived  of 
those  things  which  are  by  nature  the  common  heritage  of  all 
"  I  got  here  first"  may  be  a  good  claim  to  a  reasonable  share  of 
land,  but  not  to  a  State  or  county  or  town,  to  the  exclusion  of 
those  who  come  after.  There  is  no  divine  decree  commanding 
that  the  world  shall  be  parcelled  out  among  a  chosen  few  who 
shall  exact  tribute  from  the  rent  of  mankind  for  the  privilege 
of  enjoying  a  share  of  nature's  gift. 

And,  on  the  other  hand,  the  sense  of  individualism,  the  prompt- 
ings of  desire,  and  all  the  finer  instincts  of  human  nature  unite 
in  protest  against  any  scheme  to  destroy  competition,  tame 
human  endeavor,  stifle  the  leaping  aspirations  of  youth,  and 
dull  the  sense  of  keenest  joy,  by  drowning  emulation  in  the 
Dead  Sea  of  communistic  equality.  In  order  to  correct  social 
abuses  and  industrial  wrongs,  it  is  not  necessary  to  tear  down 
the  old-established  institutions  and  build  anew  according  to 
plans  revealed  in  dreams. 

Our  social  structure  has  been  slowly  and  gradually  evolved, 
under  the  shaping  hand  of  time,  by  the  forces  of  human  na- 
ture. We  cannot  tear  it  down  if  we  would ;  its  foundations  are 
deep,  its  walls  are  lofty  and  strong.  Civilization  will  never  con- 
sent to  abide  in  a  habitation  artificially  constructed,  arranged, 
and  decorated,  according  to  the  elaborate  specifications  of  arti- 
sans who,  through  success  at  scroll-saw  fancy  work,  have 
acquired  the  reputation  of  social  architects. 

But  reforms  are  needed,  and  sooner  or  later  they  will  come, 
and  demand  admission  with  an  authority  that  cannot  be  ques- 
tioned. Better  to  make  way  for  them  and  bid  them  welcome. 
Much  may  be  done.  Obstructions  may  be  removed ;  economic 
forces  may  be  assisted,  modified,  or  hindered ;  currents  may  be 
turned  into  new  channels ;  industrial  laws  may  be  conformed  to 
the  demands  of  justice  and  equal  rights ;  and  the  struggling 
poor  may  be  assisted  upward  into  the  sunlight  of  a  warmer 


340  THE  DISTEIBUnON   OF   WEALTH. 

social  life,  where  the  destroying  blight  of  poverty  maj^  not 
reach,  and  kindlier  feelings  and  nobler  aspirations  will  be 
nourished  into  growth. 

The  remedies  here  suggested  do  no  violence  to  social  order ; 
they  involve  no  destruction  of  property  rights,  no  overthrow  of 
established  institutions,  no  chimerical  scheme  of  communistic 
equality,  no  artificial  reconstruction  of  human  society,  no  un- 
tried experiment  freighted  with  possibilities  of  extreme  disaster. 
They  conform  to  the  principles  of  tried  legislation  embodied  in 
existing  statutes,  and  may  be  subjected  to  the  test  of  experience 
without  any  rearrangement  of  the  industrial  programme.  They 
involve  no  temporary  expedients ;  and  yet,  I  believe  them  to  be 
effective  and,  in  conjunction  with  revenue  measures  elsewhere 
suggested,  sufficient.  Full  scope  is  left  for  the  free  play  of  the 
desires,  hopes,  and  ambitions  of  men.  The  acquisition  of  prop- 
erty is  aided  and  encouraged,  and  not  restrained,  except  from 
those  excessive  accumulations  by  which  are  built  up  great  for- 
tunes that  represent  booty  gathered  from  the  people  by  the  use 
of  an  unjust  advantage,  which  accumulated  capital  possesses,  in 
competition  with  labor.  Talent  and  skill  will  still  be  left  free  to 
contend  for  the  prize  of  fortune  honorably  won ;  and,  in  plain 
view  of  every  man  who  toils,  the  future  will  display  the  promised 
reward  of  a  home,  a  competence  for  old  age,  and  a  little  store 
of  wealth  for  dependent  wife  and  children.  Where  to-day  he  is 
loitering  on  the  way,  weaiy  of  the  burden  of  unrequited  toil, 
now  and  then,  perchance,  quickening  his  sluggish  pace  as  he 
catches  the  gleam  of  distant  gold,  only  to  resume  his  lagging 
step  as  he  reflects  that  his  vision  extends  beyond  the  goal 
where  the  journey  of  his  years  must  end,  then,  encouraged  and 
buoyed  with  the  hope  of  generous  recompense,  he  will  march 
forward  with  strong  and  steady  tread  to  the  achievement  of 
possible  aims. 

Competition  is  one  of  the  vital  forces  of  all  social  and  indus- 
trial life.  But  competition  unrestrained  enables  the  strong  to 
trample  the  weak  underfoot ;  by  it  monopoly  may  be  built  up 
as  well  as  destroyed ;  by  means  of  competition  the  great  capi- 
talist crushes  small  competitors,  and  everywhere  the  strong 
override  the  weak.  How  far  the  government  should  interfere 
is  always  a  question  to  be  determined  relative  to  existing  con- 


THE  DISTRIBUTION   OF  WEALTH.  341 

ditions,  the  stage  of  civilization,  and  of  moral,  intellectual,  and 
industrial  development.  No  universal  formula  can  be  devised. 
We  cannot  abolish  human  passions,  nor  eliminate  selfishness  and 
avarice  as  potent  factors  in  commercial  life ;  we  cannot  change 
the  elemental  forces,  but  we  can  restrain  and  limit  their  action ; 
and  this  is  the  purpose  of  nearly  every  law  that  is  enacted.  It 
is  not  at  all  necessary  that  industry  or  commerce  should  be 
fretted  with  limitations  that  interfere  with  that  free  play  which 
is  essential  to  general  prosperity ;  nor  should  unlimited  license 
be  permitted  to  the  strong  to  despoil  the  weak  in  the  name  of 
free  competition  and  unrestricted  trade. 

That  it  is  practicable  to  arrest  the  centralization  of  wealth  in 
this  country,  and  to  secure  and  maintain  a  more  equitable  distri- 
bution of  wealth  than  that  which  now  exists  in  this  or  any  of 
the  nations  of  Europe,  is  certain.  That  this  result  may  be  ac- 
complished by  means  of  general  legislation,  conforming  to 
clearly-defined  principles,  is  also  evident.  The  people,  however, 
do  not  much  concern  themselves  about  dangeifs  that  lie  some 
distance  in  the  future  ;  they  are  disposed  rather  to  pursue  what 
appears  to  be  present  interest,  and  secure  immediate  results. 
And  so  we  shall  drift  forward  much  like  a  whaling  vessel  on  the 
high  seas,  often  shifting  our  course  and  crossing  our  own  track 
in  pursuit  of  the  whale  we  may  for  the  time  be  chasing. 

However,  education  is  more  nearly  universal  now  than  at  any 
other  period  in  history,  and  more  nearly  so  in  this  country  than 
in  any  other.  There  has  been  awakened  an  interest  in  eco- 
nomic science,  and  the  masses  of  the  people  realize,  to  an  extent 
which  they  have  never  realized  before,  that  the  general  frame 
and  policy  of  the  laws  of  a  country  have  much  more  to  do  with 
the  prosperity  of  the  people  than  is  apparent  to  casual  or 
superficial  observation. 


342  THE  DI8TEIBUTI0N  OP  WEALTH. 

CHAPTER   XII. 

EDUCATION   OF   THE    PEOPLE. 

Improvement  in  the  condition  of  the  working-man  necessarily 
depends,  in  chief  measure,  upon  his  ability  and  disposition  to 
help  himself.  The  law  may  secure  to  him  opportunity,  and  may 
protect  him  from  the  encroachment  of  superior  power;  but 
being  himself  the  maker  of  laws,  the  source  of  the  policies  by 
which  his  destiny  is  shaped,  it  is  to  himself  that  he  must  look 
for  whatever  measure  of  relief  may  be  found  in  constitutions  or 
in  the  operation  of  friendly  statutes.  Those  who  are  unable  to 
help  themselves,  must  be  'content  to  occupy  such  position  as 
may  be  assigned  to  them,  and  enjoy  such  advantages  as  may  be 
conceded  to  them  by  others,  whose  chief  effort  it  must  be  to 
promote  their  own  individual  welfare.  It  is  therefore  evident 
that  the  working-man  must  possess  the  degree  of  intelligence 
and  information  required  in  order  to  enable  him  to  comprehend 
his  own  interests,  and  the  measures  by  which  they  may  be  pre- 
served and  promoted.  And  it  is,  perhaps,  still  more  important 
that  the  great  body  of  working-people  should  possess  that  de- 
gree of  loyalty  to  principle  that  is  essential  to  secure  united 
effort  in  the  promotion  of  common  interests.  Without  conform- 
ing to  these  requirements  that  steady  concert  of  action  neces- 
sar}'  to  achieve  results  cannot  be  secured ;  and  the  welfare  of 
the  working-people,  as  a  whole,  will  be  lost  sight  of  in  the  selfish 
individual  pursuit  of  immediate  temporary  advantage,  or  of 
cunningly-devised  policies  designed  for  the  promotion  of  special 
interests  under  the  cover  of  a  seeming  purpose  to  promote  the 
general  welfare. 

In  this  connection  may  be  mentioned  a  great  and  growing 
evil,  in  the  suppression  of  which  working-men  have  a  special 
interest.     I  refer  to  the  use  of  money  in  elections. 

The  commercial  vote  of  the  country,  already  large,  is  steadily 
increasing.  The  number  of  those  whose  votes  may  be  pur- 
chased, in  many  communities,  will  exceed  ten  per  cent,  of  the 
total  vote.    While  there  are  no  statistics  on  the  subject,  every 


THE  DISTRIBUTION   OF  WEALTH.  343 

person  who  is  well  informed  concerning  the  manner  in  which 
elections  are  conducted  is  cognizant  of  the  fact  that  large  num- 
bers of  American  citizens  make  merchandise  of  the  elective 
franchise.  Where  the  evil  prevails,  these  persons  are  known, 
and  their  names  may  be  found  alphabetically  arranged  on  the 
lists  of  local  political  managers.  And,  if  necessary,  the  execu- 
tive force  of  either  of  the  great  political  parties  of  the  country, 
when  in  perfect  organization  for  practical  campaign  work,  could 
in  thirty  days  ascertain,  by  a  close  approximation  that  would 
do  credit  to  the  census  bureau,  the  number  of  American  citizens 
who,  for  a  consideration  of  from  fifty  cents  to  twenty-five  dol- 
lars, the  amount  depending  on  the  individual  and  the  state  of 
the  market,  can  be  persuaded  to  cast  their  ballots  for  the  candi- 
dates of  either  of  the  contending  parties. 

To  be  elected  to  any  office  frequently  costs  the  successful 
candidate  more  than  the  emoluments  of  the  office  amount  to ; 
and  he  who  gets  through  at  the  expense  of  a  year's  salary  may 
congratulate  himself;  while  the  unsuccessful  candidate,  who 
loses  both  his  money  and  the  office  to  which  he  aspires,  is  liable, 
in  consequence,  to  become  involved  in  that  financial  ruin  which 
frequently  marks  with  painful  emphasis  the  disappointment  of 
defeated  ambition. 

The  degree  of  demoralization  varies  greatly  in  different  locali- 
ties, and  many  counties  are  almost  wholly  exempt.  But,  in 
the  aggregate,  the  amount  of  money  expended  for  venal  pur- 
poses in  contests  for  nominations,  and  in  elections,  is  very 
great. 

"  How  much  money  has  he  to  put  into  the  fight  ?"  is  one  of 
the  most  common  inquiries  made  concerning  an  aspirant  for 
nomination  to  a  public  office.  And,  where  contests  are  close 
and  the  floating  vote  is  large,  it  is  the  usual  thing  to  select  a 
candidate  with  distinct  reference  to  his  bank  account. 

It  is  the  custom  to  refer  the  responsibility  for  this  evil  to  poli- 
ticians, and  to  candidates  who  are  frequently,  in  fact,  but  the 
unwilling  victims,  unable  to  ignore  prevailing  conditions.  Per- 
sonal interest,  laudable  ambition,  an  honest  belief  that  certain 
principles  or  policies  ought  to  prevail,  and  a  public  opinion  that 
howls  for  success,  compel  men  to  yield  to  the  demands  of  those  who 
are  moved  by  no  consideration  higher  than  a  desire  for  money, 


344  THE  DISTRIBUTION   OF  WEALTH. 

and  whose  demands  are  always  accompanied  by  the  certainty 
that,  unless  complied  with,  their  votes  will  count  on  the  other 
side.  A  candidate  for  office  is  considered  the  legitimate  prey  of 
every  political  black-mailer  in  his  district,  and  his  success  gen- 
erally depends  to  a  great  extent  upon  the  manner  in  which  he 
complies  with  the  demands  upon  his  purse. 

As  a  rule,  those  who  interest  themselves  in  public  affairs,  and 
conduct  the  management  of  political  campaigns  according  to 
the  terms  prescribed  by  an  established  usage,  are  less  to  be 
censured  than  may  be  supposed.  If  they  who  are  most  prone 
to  visit  censure  upon  politicians  were  themselves  to  enter  into 
this  branch  of  a  necessary  public  service,  they  would  find  it 
somewhat  difficult  to  get  through  the  heat  and  dust  of  a  politi- 
cal campaign,  wearing  robes  of  spotless  white,  without  showing 
a  few  unseemly  smudges  at  the  close. 

The  drawing-room  moralist  who,  that  he  may  preserve  his 
virtuous  innocence  untarnished  and  his  reputation  unscarred, 
stands  aloof  from  the  battle,  and  who, 

"  But  for  these  vile  guns,  would  himself  have  been  a  soldier," 

may  be  a  very  proper  and  circumspect  individual,  but  he  is  not 
one  of  the  most  useful  members  of  society. 

The  blackened  face  of  the  miner,  the  calloused  hands  of  the 
mechanic,  the  grim  visage  of  the  engineer  are  pledges  of  work 
performed ;  and  in  the  moral  and  jjolitical  field  there  are  con- 
taminating contacts  that  cannot  always  be  avoided  by  those 
who  achieve  results. 

The  demoralization  of  the  people  is  to  be  condemned  not  only 
as  a  great  moral  evil,  but  the  working-men,  who  are  most  ex- 
posed to  the  danger  that  lurks  in  corrupt  elections,  have  special 
interest  in  the  preservation  of  the  integrity  and  dignity  of  the 
American  voter.  Wealth  is  already  a  potent  factor  in  elections. 
Political  managers,  politicians,  legislators  are  brought  under 
obligation  to  a  power  which  they  dare  not  offend.  Those  who 
are  most  able,  and  most  inclined  to  serve  the  interests  of  the 
people,  are  often  deterred  from  seeking  political  preferment. 
Legislative  action  that  would  promote  the  interests  of  working- 
men  to  the  injury  of  monopolies,  or  to  the  detriment  of  aggre- 


THE  DISTRIBUTION  OP  WEALTH.  346 

gated  wealth,  is  prevented ;  for  a  political  party  must  take  care 
not  to  arouse  the  angry  antagonism  of  those  who  hold  the  power 
to  defeat  it.  The  evil,  at  present,  is  not  that  votes  are  bought 
for  the  special  purpose  of  subserving  the  interests  of  wealth. 
It  lies  rather  in  the  fact  that  political  parties,  being  largely  de- 
pendent for  success  upon  contributions  from  men  of  great 
wealth,  must  so  shape  their  policies  as  not  to  give  offence  to 
those  who,  by  withholding  their  aid,  or  by  contributing  to  the 
opposing  party,  have  it  in  their  power  to  prevent  success. 
When  a  party  assails  the  evils  of  aggregated  wealth,  it  awakens 
an  enemy  whose  opposition  it  cannot  withstand. 

The  masses  of  honest  voters  naturally  divide  in  nearly  equal 
numbers  between  the  two  great  political  parties  of  the  country. 
Each  side  is  always  intensely  desirous  of  success.  Aggregated 
wealth  holds  the  power  to  control  the  commercial  vote,  and 
give  success  or  bring  defeat  to  either  party, — to  either  cause. 
Thus  wealth  is  able  to  dictate  to  either  party,  and  neither 
party  dare  venture  far  enough  to  give  serious  offence.  They 
come  to  the  lion  in  the  pathway,  and  then  prudently  turn  back. 

The  ballot  is  the  working-man's  only  protection.  The  elec- 
tive franchise  must  be  guarded  as  the  most  sacred  privilege  of 
freemen.  If  votes  are  to  be  bought  and  sold  as  an  article  of 
merchandise,  then  truly  money  is  king,  and  every  politician 
and  every  citizen  seeking  political  preferment  must  do  the  king 
homage.  And  there  are  six  millionaires  in  the  United  States 
Senate  to-day  to  attest  the  measure  of  their  loyalty. 

Legislatures,  manifesting  double  zeal  in  the  pursuit  of  abstract 
justice,  and  none  at  all  in  the  pursuit  of  practical  results,  have 
generally  enacted  laws  punishing  alike  the  man  who  buys  and 
the  man  who  sells  his  vote  ;  and  thus,  closing  the  mouths  of  all 
witnesses  to  the  transaction,  have  protected  both  parties  from 
exposure  to  the  censure  of  public  opinion  by  making  secrecy  a 
necessity  alike  to  each. 

If  those  alone  who  barter  their  votes  should  be  made  subject 
to  penalty,  all  others  could  be  required  to  testify;  and  grand 
juries  would  need  have  no  great  difficulty,  by  following  the  con- 
tributions of  candidates  and  others  to  the  point  of  ultimate  ex- 
penditure, in  discovering  those  who  have  sold  themselves.  The 
evil  can  be  reached  and  broken  up  when  there  is  developed  a 


346  THE  DISTRIBUTION  OP  WEALTH. 

disposition  to  resort  to  practical  measures.  Disfranchisement  is 
a  natural  and  appropriate  penalty. 

A  system  of  balloting,  like  that  known  as  the  Australian  Sys- 
tem, that  leaves  the  voter  to  select  and  deposit  his  ballot,  with- 
out the  presence  and  free  from  the  espionage  of  any  who  may 
have  an  interest  to  see  that  a  vote  has  been  delivered  according 
to  promise,  will,  in  time,  greatly  modify  the  evil.  But  the  only 
remedy  that  can  be  relied  on  as  effective  and  complete  is 
universal  education  and  the  higher  standard  of  manhood  which 
intellectual  and  moral  training  alone  can  secure. 

Improvement  in  the  condition  of  the  working-man  depends 
upon  his  intelligence;  upon  his  having  a  true  conception  of  his 
relations  as  a  moral  and  social  being ;  upon  his  sentiments  of 
equity  and  justice ;  upon  the  strength  of  his  affections ;  and 
upon  his  reverence  for  worthy  ideals. 

Our  public  schools  afford  fair  opportunity  for  secular  educa- 
tion and  a  certain  amount  of  moral  training  and  social  culture ; 
but  the  number  of  children  who,  because  of  the  poverty  or 
indifference  of  parents,  are  not  permitted  to  enjoy  the  oppor- 
tunities placed  before  them  is  very  large.  That  mass  of  crude, 
untrained  humanity,  without  aspirations,  without  worthy  am- 
bitions, without  sentiment,  that  lives  but  to  eat  and  drink,  com- 
petes for  the  lowest  wages,  and  drags  to  the  level  of  its  own 
standard  all  those  pursuing  occupations  that  lie  within  reach  of 
its  sullied  hands,  grows  day  by  day.  Occasionally  are  seen  per- 
sons of  refinement  and  education,  by  accident  or  misfortune, 
thrust  down  to  the  lowest  industrial  level,  compelled  to  measure 
their  necessities  by  the  standard  of  this  vulgar  herd. 

It  is  from  this  crowd  that  capital  draws  constant  supplies  of 
labor  with  which  to  beat  down  wages,  in  the  interest  of  higher 
profits ;  for  there  are  few  who,  though  their  intelligence  be  of  a 
low  order,  may  not  be  utilized  to  feed  a  machine,  and  thereby 
displace  some  worthy  man  who  is  not  content  with  the  bare 
necessities  of  food  and  raiment  and  squalid  shelter. 

The  intelligent  working-man  cannot  afford  to  compete  with  a 
human  automaton.  And  he  must  see  to  it  that  the  people  who 
stand  upon  this  low  plane  are  lifted  to  a  higher  level.  If  they 
were  exclusively  confined  to  one  industry,  and  were  wholly  out 
of  the  line  of  direct  competition  with  working-men  of  other 


THE  DISTRIBUTION  OF  WEALTH.  347 

orders,  their  influence  might  be  little  felt  beyond  their  own  in- 
dustrial circle.  But  they  spread  through  the  industries;  and 
everywhere  their  competition  is  more  or  less  felt  in  reducing 
the  standard  of  living,  and  thereby  lowering  the  standard  of 
wages. 

Every  measure  that  may  be  effectively  employed  to  promote 
the  education  of  the  people  is  a  measure  in  the  interest  of 
working-men  who  aspire  to  a  degree  of  comfort  and  refinement 
above  the  coarse  and  meagre  subsistence  that  satisfies  the  more 
urgent  wants  of  those  who  have  not  learned  to  live. 

Every  available  agency  should  be  employed  to  get  children, 
whose  education  is  being  neglected,  into  school,  and  to  keep 
them  there ;  and,  when  necessary,  compulsory  measures  should 
be  employed.  From  an  economic  stand-point  alone,  general 
education  is  a  necessity  in  the  interest  of  working-people.  He 
who  seeks  to  share  in  this  great  social  and  industrial  copartner- 
ship should  be  required  to  comply  with  the  conditions  necessary 
for  the  general  welfare  of  the  people  and  in  no  way  hurtful  to 
himself. 

Care  should  be  exercised  in  the  management  and  control  of 
our  public  schools.  They  at  present  fall  far  short  of  that  degree 
of  efiSciency  which  should  be  required,  and  which  is  readily  at- 
tainable, except  for  the  prevailing  popular  indifference  as  to  the 
more  important  results  of  educational  training.  As  aids  to  the 
moral  and  social  refinement  of  the  people,  they  lack  the  support 
and  hearty  co-operation  of  parents,  as  well  as  the  efficiency  of 
thoroughly-competent  teachers.  Yet  they  nevertheless  consti- 
tute the  strength  of  our  civilization,  and  the  power  on  which 
we  must  rely  for  still  further  progress  in  the  direction  of  a  wider 
intellectual  and  moral  culture. 

If  railways,  street  railways,  telegraphs,  water-works,  gas- 
works, coal-mines,  and  timber  lands  could  be  owned  by  the 
government  and  efficiently  managed  through  government  offi- 
cials, and  if  branches  of  the  various  manufacturing  industries 
requiring  large  amounts  of  capital  could  be  established  and  con- 
ducted by  government  agents  in  different  localities,  so  as  to 
employ  labor  otherwise  unemployed,  at  reasonable  but  moderate 
wages,  so  as  to  protect  that  class  of  workers  who  are  oppressed 
by  the  grasping  avarice  of  those  disposed  to  take  advantage  of 


348  THE  DISTRIBUTION  OF  WEALTH. 

the  necessities  of  others,  and  by  protecting  this  class  relieve  the 
labor  market  from  that  unhealthy  competition  which  steadily 
depresses  the  value  of  labor ;  if  fire  insurance  could  be  furnished 
by  the  State ;  and  if  the  State,  as  the  representative  of  the  peo- 
ple, could  receive  their  small  savings  and  erect  for  them  suitable 
homes,  following  the  principle  on  which  building  and  loan  asso- 
ciations are  conducted,  but  exacting  a  lower  rate  of  interest, 
very  much  might  be  accomplished  in  aid  of  those  who  suffer 
from  industrial  conditions.  But  how  would  it  be  possible  to 
secure  and  retain  in  position  intelligent,  competent,  and  faithful 
officials  to  conduct  railways  and  manage  telegraphs  or  manu- 
facturing industries,  conducted  under  government  supervision  ? 

The  ignorance,  selfishness,  cupidity,  dishonesty,  and  prejudice 
existing  among  the  working-men  themselves  constitute  the 
principal  barrier  to  the  success  of  any  scheme  of  the  character 
here  pointed  out,  or  indeed  of  any  other  effective  measure  for 
their  relief  When  the  great  majority  of  the  working-people 
shall  have  become  intelligent  enough  to  understand  their  own 
needs,  and  to  comprehend  the  measures  by  which  their  common 
welfare  may  be  promoted;  when  they  shall  be  willing  to  re- 
linquish temporary  selfish  advantages  in  order  to  share  in  the 
benefits  to  be  derived  from  community  of  labor  and  capital ; 
when  they  can  be  trusted  in  the  selection  of  competent  officials 
of  the  State  or  of  corporations  organized  in  their  interest ;  when 
they  shall  learn  to  abate  somewhat  the  fierceness  of  individual 
competition,  and  submit  to  regulations  looking  to  the  common 
welfare  of  all  classes,  it  may  then  be  practicable  to  secure  to 
every  man  the  opportunity  for  steady  employment  and  fair 
remuneration. 

The  industrial  condition  of  a  people  may  be  gauged  by  their 
intelligence,  and  by  their  social  and  moral  culture.  And  any 
remedy  for  industrial  evils  that  does  not  include  education  as  a 
principal  factor  is  radically  defective.  An  individual  with  little 
education  may  succeed;  another  of  the  highest  attainments 
may  fail.  But  an  educated  people,  or  an  educated  class,  always 
succeed ;  and  the  industrial  position  of  an  uneducated  class  is 
always  inferior. 

The  wages  of  any  industrial  class  are  equivalent  to,  and 
limited  by,  the  consumption  by  that  class  of  the  products  of 


THE  DISTRIBUTION  OF  WEALTH.  349 

labor.  Consumption  is  determined  by  habit,  by  intelligence,  by 
refinement ;  in  short,  by  education.  Thus  it  is  education  of  the 
class  that  determines  the  wages  of  the  class.  The  status  of  the 
individual  worker  is  determined  by  his  industrial  class,  and 
every  working-man  is  concerned  for  the  improvement  of  the 
condition  of  society  in  general  from  which  he  cannot  disasso- 
ciate himself. 

THE   WOBK  OF  THE   CHURCH. 

During  one  day  of  each  week  ordinary  industry  is  suspended, 
and  the  people  rest  from  their  accustomed  pursuits.  With  this 
day  comes  to  the  masses  of  the  people  opportunity  for  leisure, 
social  intercourse,  the  pursuit  of  useful  knowledge,  and  the  culti- 
vation of  those  refining  and  ennobling  sentiments  that  shrink 
from  the  harsh  contacts  of  e very-day  life.  To  cultivate  these 
sentiments  in  the  hearts  of  the  people,  to  awaken  and  strengthen 
their  better  thoughts  and  impulses,  I  conceive  to  be  the  chief 
mission  of  church  associations,  and  the  purpose  which  justifies 
large  expenditures  of  money  in  the  erection  of  church  buildings 
and  the  employment  of  an  educated  ministry. 

As  an  organized  institution  firmly  established  in  the  customs, 
habits  of  thought,  prejudices,  and  beliefs  of  the  people,  the 
Church  has  appropriated  this  day  for  its  own  special  work.  It 
is  possessed  of  advantages  and  opportunities  enjoyed  by  no 
secular  institution ;  and,  in  great  degree,  it  must  be  judged  by 
results,  as  measured  by  the  moral  and  religious  condition  of  the 
people.  May  it  not  have  failed  to  fully  grasp  the  true  con- 
ception of  its  mission  ?  Eeligious  organizations  are  one  of  the 
natural  outgrowths  of  human  society.  There  is  no  civilized 
people  without  them.  They  vary  jn  form  and  character  accord- 
ing to  the  people  who  compose  them.  They  are  as  perfect  as 
other  social  institutions,  and  no  more  so.  They  may  be  most 
effective  agencies  to  promote,  or  most  effective  obstructions  to 
hinder  and  delay,  the  moral  growth  of  society.  Being,  in  their 
nature,  fashioned  by  ancient  traditions  and  long-established 
ideas,  they  are  essentially  conservative.  It  is  in  the  nature  of 
things  that  they  should  change  but  slowly,  and  operate  as  a 
constant  check  upon  the  tendencies  of  advancing  thought.  But 
their  advance  movements  are  liable  to  be  too  long  delayed, 
while  the  people  go  from  them  and  their  influence  is  weakened. 


360  THE  DISTKIBUTION  OF  WEALTH. 

The  fact  that  they  everywhere  exist,  and  always  have  existed, 
is  quite  sufficient  evidence  that  they  are  to  continue  as  one  of 
the  principal  agencies  in  moulding  popular  ideas  and  impulses. 
That  they  perform  a  useful  and  necessary  service  ought  to  be 
apparent  even  to  those  who  find  nothing  to  commend  in  the 
special  mission  which  they  assume.  Whatever  we  may  think 
of  any  formulated  system  of  theological  beliefs,  nevertheless 
there  are  certain  sentiments  that  cluster  around  the  faiths  of 
religion,  and  which,  among  the  people  at  large,  under  the  in- 
fluence of  defined  ideals  fashioned  in  the  mould  of  venerable 
traditions,  are  nourished  into  growths  that  no  people  can  afford 
to  neglect. 

It  is,  of  course,  unreasonable  to  expect  that  all  the  world  may 
be  driven  to  accept  any  one  form  of  speculative  theological 
belief;  or  that  there  is  any  principle  of  ethics  involved  in  be- 
lieving or  not  believing  this  or  that,  or  in  believing  nothing  at 
all.  Fancies  with  regard  to  the  unseen  world  naturally  shape 
themselves  into  beliefs,  and  certain  accepted  ideals  become  cur- 
rent among  the  people  of  a  nation  or  an  age ;  and  the  realist 
who  conceives  it  a  duty  to  subject  this  poetry  to  the  test  of 
philosophy  has  no  true  conception  of  the  nature  and  needs 
of  the  human  mind.  Whether  Satan  be  an  absolute  physical 
reality  of  definite  specific  gravity,  or  the  conception  of  a 
boisterous  fancy,  the  Gulliver  of  religious  romance,  it  is  not 
necessary  to  inquire.  He  has  enacted  a  leading  part  in  the 
drama  of  human  life,  and  is  still  doing  service  in  tiae  field  of 
ethics  as  a  vivid  personification  of  evil.  His  period  of  useful- 
ness has  not  yet  expired;  and  though  bearing  the  scars  of  many 
wounds  from  the  spear-thrusts  of  modern  science,  he  is  still 
abroad  dodging  in  and  out  across  the  pathway  of  human  life, 
in  the  dim  twilight  of  uncertainty  that  hangs  on  the  edges  of 
the  day. 

The  higher  Christian  ideals,  which  exhibit  the  best  concep- 
tions of  divine  character,  are  most  valuable  aids  in  subduing  the 
selfish  instincts  of  human  nature,  and  in  purifying  and  refining 
human  thought  and  feeling.  To  preserve  these  noble  concep- 
tions and  mould  character  into  correspondence  with  these  lofty 
ideals  is  peculiarly  the  function  of  the  Church  and  its  ministry. 
But  these  ideals  are  not  to  be  subjected  to  the  tape-line  measure- 


THE   DISTRIBUTION   OP   WEALTH.  351 

ments  of  prosaic  logic,  nor  tested  by  the  rules  of  material 
science ;  and  the  minister  who  conceives  it  to  be  his  duty  to 
stake  the  claims  of  the  Christian  religion  upon  the  correspond- 
ence of  these  conceptions  with  absolute  realities  understands 
little  of  the  philosophy  of  human  thought  and  feeling.  He  who 
conceives  it  to  be  his  mission  to  be  continually  pulling  down 
the  fancy-woven  drapery  that  adorns  poetic  ideals,  in  order  that 
he  may  count  the  meshes  and  exhibit  the  texture,  is  but  a 
clumsy  realist  out  of  place.  He  who  makes  the  test  of  religious 
virtue  the  belief,  or  professed  belief,  in  some  grotesque  meta- 
physical distortion,  instead  of  pure  and  noble  sentiment,  is  a 
destroyer  of  faith  and  an  enemy  to  the  cause  he  assumes  to 
espouse.  When  metaphysical  beliefs  are  exalted  into  virtues, 
and  honesty,  purity,  nobility  of  sentiment,  and  refinement  of 
feeling  are  degraded  to  the  rank  of  secondary  merit,  religion 
loses  its  power  and  its  worth.  The  prevailing  apathy,  to  say 
nothing  of  the  open  antagonism,  towards  the  Church  at  the 
present  time  can  'be  accounted  for  only  by  the  natural  repug- 
nance of  the  human  mind  to  the  idea  of  a  compulsory  acceptance 
of  a  code  of  distorted  metaphysics  as  a  test  of  religious  merit. 
If  the  energy  of  the  Church  were  directed  to  the  teaching  of  the 
saving  power  of  the  Christian  virtues  instead  of  the  saving 
power  of  beliefs  which  are  to-day  professed  only  in  a  per- 
functory sort  of  way  by  many  of  the  most  intelligent  and 
enlightened  leaders  of  the  Church  itself,  then  the  influence  of 
genuine  religious  faith  would  take  hold  of  the  hearts  of  the 
people,  and  the  minister  would  become  a  more  effective  teacher 
and  leader. 

The  hope  of  immortality  springs  perennially  in  the  human 
heart.  Mind  cannot  be  chained  to  matter;  the  imagination 
will  never  stay  its  flight  within  the  bounds  of  material  vision, 
but  will  continue  to  soar  into  the  realms  of  poetry  and  romance, 
and  gather  flowers  of  beauty  with  which  to  adorn  the  realities 
of  life.  It  will  continue  to  fashion  ideals,  and  the  human  heart 
will  do  them  reverence.  Beliefs  concerning  supernatural  things 
have  their  origin  in  the  nature  and  constitution  of  the  human 
mind  ;  they  are  irrepressible,  and  no  philosophy  can  extinguish 
or  supersede  them.  But  it  is  not  the  function  of  the  Church  to 
stereotype  these   beliefs  into   unchanging  forms,   and  compel 


352  THE  DISTEIBUTION  OP  WEALTH. 

poetic  fancy  to  travel  a  beaten  path ;  or  to  put  reason  on  the 
rack  to  extort  confessions  of  beliefs  not  honestly  entertained. 

There  is  no  class  who  so  much  need  the  support  of  a  warm 
and  generous  faith  in  the  saving  power  of  Christian  virtues,  or 
who  are  more  in  need  of  the  inspiriting  influence  of  an  awakened 
religious  sentiment,  than  the  working  poor,  who,  for  the  most 
part,  are  beyond  the  range  of  effective  church  influence.  The 
Church  is  a  social  power,  and  its  best  influences  arise  out  of  its 
organized  social  relations.  People  form  in  groups  about  a 
centre  of  conventional  ideas,  and  enjoy  the  warmth  of  sympathy 
that  springs  from  community  of  thought  and  feeling.  Eeligious 
doctrines  are  little  more  than  solemn  passwords,  the  answer 
to  the  "  Who  comes  there  ?"  of  the  sentinel.  The  value  of  these 
social  influences  is  not  to  be  disparaged.  But  it  is  to  be  re- 
gretted that  the  direct  teaching  power  of  the  pulpit  should  be 
sacrificed  to  the  demands  of  a  conventional  theology  that  brings 
religion  itself  into  disrepute,  and  to  which  men  of  mature 
thought  yield  only  a  formal  assent,  as  a  mode  of  paying  respect- 
ful obeisance  to  social  law. 

How,  where,  and  by  whom  are  the  masses  of  the  people  to  be 
educated  and  trained  in  the  ethics  of  social  life  ?  by  whom  are 
they  to  be  taught  the  art  of  living  aright  ?  how  are  they  to  be 
instructed  in  the  principles  and  methods  of  the  domestic  train- 
ing of  children  ?  how  are  they  to  be  made  to  comprehend  the 
nature  and  value  of  moral  worth  ?  The  task  of  instructing  the 
people  in  the  philosophy  of  social  life  would  appear  to  be 
peculiarly  the  work  as  well  as  the  opportunity  of  the  minister ; 
but  his  special  training  is  not  to  that  end.  As  a  practical  guide 
and  teacher,  when  he  has  sought  to  make  his  influence  felt  in 
the  direction  of  moral  purity,  it  has  too  often  been  as  an  advo- 
cate of  some  mistaken  policy  that  demoralizes  and  destroys. 

It  was  the  pulpit,  dominated  by  theologic  dogma,  that 
banished  amusements  from  the  fireside  and  the  home-circle,  and 
drove  many  into  drinking-saloons,  and  into  the  by-ways  and 
dark  corners  of  iniquity.  And  the  young  men  and  boys  and  the 
working-men  in  our  towns  and  cities  have  followed  after.  In 
our  great  cities  the  task  of  furnishing  amusement  and  social 
recreation  to  the  laboring  poor  has  been  commonly  left  to  the 
retailer  of  whiskey  and  beer,  who  has  learned  the  art  of  enhanc- 


THE  DISTRIBUTION   OF  WEALTH.  353 

ing  the  profits  of  his  trade  by  gratifying  the  love  of  music,  the 
natural  desire  for  amusement  and  recreation,  and  the  yearning 
for  social  sympathy  that  abides  in  the  human  soul.  And  thus, 
in  his  leisure,  when  most  subject  to  the  influence  of  surrounding 
conditions,  the  working-man  is  lured  to  his  ruin. 

Cards  and  billiards  and  tenpins  and  social  dances  have  been 
driven  from  the  shelter  of  religious  influence  as  worldly  out- 
casts ;  when  the  devil  goes  gunning  for  souls,  he  can  have  no 
more  faithful  assistant  than  an  intolerant,  unthinking  minister 
to  beat  the  bushes  and  start  the  game. 

On  every  hand  may  be  observed  ministers,  the  scope  of  whose 
thought  is  confined  within  the  narrow  limits  of  traditional 
dogma,  who,  ignoring  practical  and  common-sense  methods  of 
reform,  deliver  conventional  sermons  on  the  depravity  of  the 
human  heart,  or  the  sin  of  vanity,  in  fashionable  churches  that 
vie  with  the  palaces  of  millionaires  in  luxury  of  adornment  and 
splendor  of  architectural  display,  or,  varying  the  character  of 
the  entertainment,  give  aesthetic  sparring  exhibitions  on  Sunday 
with  the  intangible  devil  of  ghostly  romance. 

The  result  of  these  efforts  is  misshapen  character;  an  ab- 
normal pietism  on  the  one  hand  and  a  lack  of  reverence  on  the 
other ;  the  world  is  filled  with  cant ;  religion  is  divorced  from 
ethics ;  and  the  most  earnest  and  sincere  religious  devotees  are 
often  found  most  deficient  in  moral  worth,  uncharitable  and  un- 
generous, wanting  in  a  sense  of  justice,  wanting  in  a  sense  of 
honor,  while  they  maintain  respectability  by  observing  conven- 
tional standards,  and  deceive  themselves,  as  they  deceive  others, 
by  assuming  those  artificial  virtues  which  a  false  theology  has 
set  in  place  of  genuine  worth. 

What  is  here  said  is  not  with  the  view  of  reflecting  censure 
upon  the  minister.  He  performs  the  difficult  part  assigned  him 
with  fully  as  much  zeal  and  loyalty  to  duty  as  any  other  mem- 
ber of  society.  But  he  is  under  the  bondage  of  an  exacting 
conventionalism ;  and,  like  a  pet  squirrel  in  a  revolving  cage,  he 
may  whirl  the  wheel,  but  he  cannot  advance.  Ostensibly  he 
occupies  the  place  of  a  leader,  yet  he  dare  not  lead.  He  may 
only  stand  still  and  exhibit  the  ancient  relics  of  medisBval 
theology,  of  which  he  is  custodian  ;  and  when  he  essays  to  vary 
his  accustomed  routine,  it  is  too  often  only  to  beat  the  snare- 

23 


354  THE   DISTRIBUTION   OF  WEALTH. 

drum  for  some  squad  of  visionary  reformers.  He  is  confined 
within  the  narrow  limits  of  prescribed  formulas  of  faith  handed 
down  from  an  ignorant  and  credulous  age,  and  is  denied  tha 
opportunity  to  do  the  most  effective  service  to  the  cause  of 
either  morality  or  Christianity.  If  he  does  become  a  student 
of  social  philosophy,  and  attempt  to  put  his  ideas  in  harmony 
■with  the  laws  of  human  nature,  and  range  himself  in  line  with 
advanced  thought,  he  incurs  the  suspicion  of  the  awful  sin  of 
unbelief  in  some  shaky  old  dogma  which  it  is  the  special  care  of 
theological  seminaries  to  guard  from  dangerous  proximity  to 
any  useful  or  practical  knowledge. 

In  order  to  better  serve  the  interests  of  the  Church  itself,  in 
order  to  promote  the  cause  of  genuine  Christianity,  and  to  ad- 
vance the  moral  culture  of  the  people  by  interweaving  into  the 
fabric  of  common  thought  and  feeling  strands  of  pure  and  noble 
sentiment,  the  minister  must  be  released  from  the  idle  task  of 
crocheting  the  filmy  threads  of  theological  metaphysics  into 
conventional  fancy  work  for  the  special  pleasure  of  those  who, 
from  habit  or  perverted  taste,  have  acquired  an  interest  in  these 
specimens  of  a  useless  art. 

The  prevailing  theology  conceives  of  God  as  a  jealous  and  in- 
tolerant being,  who  requires  of  man  that  he  disregard  the 
verdicts  of  his  own  reason,  and  that  he  accept,  as  his  belief, 
dogmas  which  to  some  appear  incomprehensible  and  to  others 
absurd ;  a  God  who,  instead  of  esteeming  man  according  to  the 
measure  of  his  manhood  and  real  worth,  attaches  the  penalty 
of  everlasting  punishment  to  disbelief,-  while  the  vilest  of  men, 
through  the  agency  of  that  humility  and  mellow  penitence  that 
besets  cowards  when  they  stand  face  to  face  with  death,  may 
win  his  eternal  love.  Such  degraded  conception  of  the  God  of 
the  universe  is  unworthy  of  a  civilized  people:  it  is  at  war  with 
morality  and  with  noble  religious  sentiment. 

Such  conception  is  no  part  of  the  Christian  religion.  But  it 
appears  to  be  the  fate  of  all  great  religions  to  become  submerged 
beneath  the  gross  superstitions  of  the  people  among  whom  they 
are  promulgated.  Barren  theological  speculation  soon  displaces 
the  plain  and  simple  utterances  of  ideal  sentiment  and  maxims 
of  pure  morals  in  which  these  messages  of  truth  are  delivered 
to  the  world ;  superstition  resumes  her  sway  and,  in  the  name 


THE  DISTRIBUTION   OF  WEAL,TH.  355 

of  the  divine  commission  she  professes  to  hold,  perpetuates  her 
power. 

The  Yedic  religion  of  India  was  a  simple  code,  giving  expression 
to  the  sentiments  of  integrity,  charity,  and  faith  in  lofty  ideals, 
free  from  gross  superstition  or  any  artificial  system  of  theology. 
But  there  came  to  the  front  a  class  of  men  called  Brahmins, 
who  laid  claim  to  special  powers,  and  built  upon  the  Vodas  a 
"  huge  artificial  system  by  which  to  rule  every  moment  of  a  man's 
life."  The  Yedas  were  made  to  say  that  "  when  Brahma  created 
man,  the  Brahmins  or  priests  came  from  his  mouth,  the  soldiers 
from  his  arm,  and  the  farmers  from  his  thigh,  and  the  Sudras 
(the  conquered  race)  from  his  foot.  The  Brahmins  thus  set 
themselves  above  all.  They  laid  down  rules  so  strict  about 
prayers  and  sacrifices,  and  made  the  favor  of  their  gods  to 
depend  on  such  trifling  things,  that  every  one  was  glad  to 
secure  their  help  to  do  these  duties  aright.  The  people  believed 
that  the  Brahmins  alone  knew  what  foods  might  be  eaten,  what 
air  might  be  breathed,  what  clothes  might  be  worn,  and  what 
was  the  proper  length  of  the  ladle  in  which  the  offering  was  to 
be  put."*  Thus  were  the  people  brought  in  bondage  to  an 
artificial  system  of  ceremonials  appealing  to  superstition  alone, 
fraudulently  devised  for  the  benefit  of  an  unscrupulous  priest- 
hood. In  a  manner  somewhat  similar  have  other  religious 
faiths  been  prostituted  to  unworthy  ends. 

In  the  earlier  centuries  of  the  Christian  religion  the  priests 
promulgated  their  doctrines,  and  built  up  theii*  power  by  pro- 
claiming eternal  damnation  to  those  who  refused  to  believe  the 
things  which  they  taught.  Perhaps  civilization  may  have 
derived  some  advantage  from  the  use  of  this  device.  Perhaps 
in  an  ignorant  and  superstitious  age  it  may  be  impossible  to 
control  and  lead  the  ignorant  masses,  even  in  the  direction  of 
their  own  welfare,  without  appeals  to  superstition.  Ignorant 
people  are  not  readily  swayed  in  moral  or  religious  matters  by 
reason  alone,  or  through  appeals  to  the  higher  emotions.  The 
oracles  of  Greece  and  Eome  may  perhaps  be  justified.  But  the 
utility  of  such  devices  lies  wholly  in  the  past.  The  coarse 
theology  of  the  Middle  Ages  is  not  adapted  to  the  present  era. 

*  The  Childhood  of  Keligions. 


356  THE  DISTEIBUTION  OP  WEALTH. 

Its  effect  at  the  present  time  is  demoralizing ;  and,  instead  of 
aiding  the  Church,  it  is  weakening  the  influence  of  the  ministry. 
It  is  as  much  out  of  place  in  a  religious  code  adapted  to  the 
nineteenth  century  as  would  be  a  stone  god  of  the  Aztecs  in  a 
modern  church.  The  sacrifice  of  cattle  and  sheep  was  a  useful 
ceremony  among  a  race  of  semicivilized  people;  among  an 
enlightened  people  it  would  be  a  coarse  burlesque. 

The  theology  of  a  people  cannot  remain  stationary.  And  it 
is  a  mistake  to  attach  the  quality  of  virtue  to  an  act  of  behef, 
and  thus  obstruct  intellectual  growth  and  erect  a  false  standard 
of  ethics. 

Eeligion  is  essentially  progressive  and  cannot  be  imprisoned 
forever  in  the  hard  dogmas  in  which  lie  dormant  the  reason  and 
conscience  of  an  unenlightened  age.  After  a  time  the  vital 
germ  within,  warmed  into  life,  will  demand  air  and  light,  and 
the  shell  will  be  broken  or  the  germ  must  die.  What  is  the 
condition  to-day  ?  Are  the  ancient  faiths  of  the  people  grow- 
ing into  strong,  deep-rooted  plants,  filling  the  moral  atmos- 
phere with  the  aroma  of  a  fragrant  bloom,  rich  in  the  promise 
of  ripened  fruit,  or  do  they  lie  dead  in  the  mould  of  decaying 
creeds  ?  The  Church  points  to  her  thousands  of  splendid  edi- 
fices, to  her  long  roll  of  membership,  counts  the  cash  in  the 
contribution-box,  and  serenely  answers  that  all  is  well.  But 
there  is  another  answer.  Ministers  are  preaching  to  vacant 
benches ;  sermons  falling  on  listless  ears  awaken  only  the  cold, 
half-cynical  response  of  formal  assent ;  the  human  heart,  that 
"  harp  of  a  thousand  strings,"  attuned  to  another  key,  no  longer 
makes  music  for  the  soul  in  answer  to  the  rude  touch  of  the 
unskilled  master  who  forever  strums  his  medley  of  resounding 
platitudes ;  the  weary  twang  of  discordant  notes  is  sweet  only 
to  those  who  sleep  and  dream. 

It  is  not  to  be  expected  or  desired  that  human  thought  shall 
ever  cease  to  range  the  field  of  theological  speculation.  Theo- 
logical beliefs  possess  their  value,  and  even  the  grosser  super- 
stitions of  a  barbarous  people  may  be  sometimes  utilized  to 
good  ends.  But  theology  is  not  of  the  essence  of  religion ;  and 
as  a  people  advance  in  knowledge  and  culture,  the  influence  of 
fixed  beliefs  concerning  supernatural  things  loses  sway.  As 
they  advance  in  knowledge,  they  cease  to  be  controlled  by 


THE  DISTRIBUTION  OF  WEALTH.  357 

superstitious  fears,  the  influence  of  theological  dogma  declines, 
and,  instead  of  relying  upon  the  will  of  an  unseen  Deity,  revealed 
in  dreams,  or  formulated  into  creeds  by  quibbling  priests,  they 
learn  that  the  laws  of  ethics  and  religion  have  their  origin  in 
the  constitution  of  the  human  mind,  in  the  impulses  of  the  heart, 
in  the  nature  of  man. 

A  religion  that  does  not  make  men  better  or  happier  here  and 
now  serves  no  good  purpose.  It  is  a  vulgar  conception  that 
men's  souls  are  to  be  saved  from  punishment  in  a  world  to  come 
by  espousing  certain  beliefs  concerning  things  unknown,  and 
that  substitutes  for  the  laws  of  natural  ethics  the  arbitrary 
commands  of  an  unseen  Deity,  whose  wrath  may  be  stirred  or 
appeased  by  observing,  or  neglecting  to  observe,  prescribed 
modes  or  ceremonials.  Such  doctrines  do  not  have  their  origin 
in  the  lofty  teachings  of  the  great  founder  of  the  Christian 
religion ;  they  are  the  remnants  of  Jewish  barbarism  and  pagan 
superstition,  useful,  perhaps,  in  their  day  as  devices  for  the  con- 
trol of  an  ignorant  populace,  but  altogether  unworthy  of  a  place 
in  the  religious  code  of  an  enlightened  people. 

It  is  not  essential  to  the  faithful  performance  of  the  proper 
work  of  the  ministry  that  the  pulpit  should  array  itself  in 
offensive  antagonism  to  fixed  theologic  faiths,  or  even  to  vulgar 
religious  prejudices;  but  the  interests  of  the  great  mass  of 
working-people  require  that  the  influence  of  the  pulpit  should 
be  extended  over  a  wider  field,  that  its  teaching  should  have 
broader  scope.  To  be  effective  it  must  be  able  to  instruct  and 
to  entertain.  Its  function  is  to  educate  the  people  in  whatever 
pertains  to  social  philosophy,  ethics,  or  religion;  to  hold  up 
worthy  ideals,  to  awaken  and  cultivate  pure  and  refined  senti- 
ment ;  in  short,  to  help  make  the  world  better  here  and  now. 

The  question  is.  Shall  the  minister  apply  himself  and  the 
agencies  under  his  control  to  the  culture  of  the  people  in  that 
broad  sense  essential  to  the  development  of  a  perfect  manhood  ? 
shall  it  be  his  work  to  lead  them  into  better  ways  of  living  and 
to  fashion  character  in  the  mould  of  ideal  conceptions  ?  or  shall 
he  continue,  along  with  fortune-tellers  and  interpreters  of 
dreams,  the  professor  of  a  mediseval  and  mysterious  art  by 
which,  through  the  device  of  a  combination  of  ceremony  and 
faith  in  things  unseen,  the  soul  is  made  happy  in  the  belief  that 


358  THE  DISTRIBirTION  OF  WEALTH. 

it  has  escaped  the  wrath  of  an  angry  Deity  in  the  world  to 
come  ? — a  peculiar  scheme  of  salvation  devised  in  the  cloister, 
remarkable  chiefly  for  the  fact  that  it  is  instantaneous  in  its  re- 
sults and  dispenses  with  the  necessity  of  both  mental  culture 
and  moral  refinements  as  conditions  of  divine  favor. 

An  able  writer,  M.  Maurice,  in  a  recent  article  truly  says, 
"There  are  few  happy  people.  And  why?  The  answer  is  a 
plain  one,  and  goes  straight  home  to  our  civilization  :  we  do  not 
educate  for  happiness.  In  no  direction  do  we  find  our  Church 
or  our  school  system  permeated  with  the  idea  that  a  young 
person  to  be  permanently  happy  must  understand  and  be  true 
to  the  laws  of  nature.  The  Church,  as  a  rule,  has  given  over 
any  effort  to  construct  a  happy  life,  and  bends  all  her  energies 
to  point  out  a  possible  happy  hereafter.  The  state  has  con- 
structed a  system  of  education  which  never  refers  to  happiness 
as  an  end.  Moral  purpose  and  our  dependence  upon  ethical 
principle  is  left  to  our  schools.  The  parochial  schools  confuse 
religion  and  a  noble  life,  and  aim  for  the  most  part  only  to  save 
souls  after  death.  In  all  directions  the  young  are  not  trained 
to  know  how  to  be  happy. 

"  The  end  of  all  education  should  be  to  create  (1)  character, 
(2)  homes,  and  (3)  citizens.  When  we  point  the  enthusiastic  to 
education  as  the  only  possible  remedy  for  ills  of  any  sort,  it  is 
sure  to  be  a  disappointment.  One-half  the  world  is  either 
concocting  a  panacea  or  is  swallowing  one.  Our  social  panaceas 
are  exactly  as  valuable  as  our  medical  cure-alls.  You  must  live 
rightly  to  be  whole  or  healthy ;  you  must  learn  rightly  and  be 
made  rightly  in  order  to  be  good  and  happy  in  your  own  soul 
and  your  relation  to  yourself,  in  your  family,  in  joxxy  relation  to 
your  children  and  partner,  and  in  the  state  as  a  citizen." 

The  ministry,  as  a  body,  lack  neither  earnestness  nor  zeal. 
They  are,  however,  the  victims  of  an  established  routine  that 
cramps  educational  growth  and  in  no  small  degree  impairs  their 
capacity  as  leaders  in  any  field  of  modern  thought.  Those 
among  them  who  possess  more  than  average  ability  or  inde- 
pendence of  character  are  often  disposed  to  disregard  the  nar- 
row limitations  that  restrict  their  influence  and  their  usefulness 
within  a  prescribed  sphere,  and  become,  in  a  broader  sense, 
educators  of  the  people ;  and  gradually,  but  slowly,  the  work 


THE  DISTRIBUTION  OP  WEALTH.  359 

of  the  ministry  takes  wider  scope.  But  they  labor  under  the 
embarrassment  of  being  compelled  to  introduce  new  ideas  by 
stealth,  arrayed  in  the  unbefitting  attire  of  conventional  phrase- 
ology already  worn  threadbare  in  the  service  of  a  superannuated 
theology.  The  hold  of  the  pulpit  upon  the  masses  grows  weaker 
and  weaker.  Its  success  in  diffusing  religious  sentiments,  and 
in  establishing  a  high  standard  of  ethics  among  the  people,  falls 
far  short  of  the  measure  of  expended  eifort. 

The  Church  must  get  its  dead  theology  out  of  the  way.  It 
must  cease  to  antagonize  demonstrated  truths ;  it  must  cease  to 
magnify  absurd  dogmas  and  to  belittle  ethics.  While  it  has  in 
a  measure  ranged  itself  in  line  with  modern  thought,  it  is  not 
yet  in  a  position  to  do  the  work  that  belongs  to  it  to  do.  The 
sooner  the  ministry  in  general  are  awakened  to  a  clear  percep- 
tion of  the  true  condition  of  affairs  the  better  it  will  be  for  the 
Church,  considered  merely  as  a  temporal  organization,  and  the 
better  it  will  be  for  the  growth  and  spread  of  Christian  senti- 
ment and  for  the  good  order  of  society. 

The  social  and  moral  training  of  the  masses  of  the  people 
cannot  be  effectively  carried  forward  without  the  aid  and  active 
co-operation  of  an  intelligent  ministry.  The  economic  forces 
which  determine  the  material  welfare  of  the  people  do  not 
operate  independent  of  ethics.  Improved  physical  conditions 
are  in  great  measure  dependent  upon  improved  education,  and 
an  advance  in  moral  and  religious  sentiment  depends  upon  im- 
proved physical  conditions.  The  mental  and  physical  cannot 
be  divorced ;  ignorance  and  immorality  beget  poverty,  and 
poverty  begets  ignorance  and  vice. 

Any  system  of  economics  that  fails  to  take  account  of  the 
moral  and  intellectual  education  of  the  people,  and  of  the  influ- 
ences and  agencies  by  which  education  is  promoted  or  retarded, 
rightly  or  wrongly  directed,  omits  a  leading  and  controlling 
factor  in  the  problem. 

We  readily  recognize  in  the  Mormon,  Moslem,  or  Hindoo 
religions  forces  that  stimulate,  retard,  or  modify  industrial 
civilization.  The  institutions  in  our  midst  exercise  a  corre- 
sponding influence  ;  and  improvement  in  industrial  or  economic 
conditions  of  the  people  of  our  own  country  depends  also  in 
great  measure  upon  the  Church,  and  the  manner  in  which  it 


360  THE   DISTRIBUTION   OF  WEALTH. 

may  perform  its  part  in  promoting  the  general  culture  of  the 
people. 

Even  where  the  Church  has  in  great  measure  lost  its  potency 
as  a  direct  moral  force,  and  where  it  neglects  its  proper  work  as 
the  chief  agency  in  promoting  the  education  of  the  people,  it 
still  remains  a  leading  factor  in  our  civilization,  if  for  no  other 
reason  because  of  the  ground  it  occupies  and  from  which  it  in 
great  measure  excludes  other  agencies.  The  Church  is  a  power 
by  reason  of  its  inertia  alone.  It  is  interwoven  with  every 
fibre  of  the  social  fabric,  associated  with  the  ancient  traditions 
and  popular  conceptions  that  unite  a  people  into  a  society  of 
common  ideas,  faiths,  and  tendencies ;  and  the  great  problem  of 
economic  reform  and  social  development  cannot  be  worked  out 
without  regard  to  the  Church  and  its  teachings. 


INDEX. 


A. 

Agriculture,  cause  of  low  prices  in, 
107,  120,  240. 
in  thirteenth  century,  14. 
product  of,  in  United  States,  3G. 
profits  of,  60,  67. 
statistics  of,  36. 
wages  in,  14,  60,  86,  95. 
Atkinson,  Edward,  9,  19,  21,  36,  60, 
71,  155,  206,  209,  218,  261,  306. 


Badeau,  Adam,   on   agricultural  la- 
borers in  England,  14. 
on     land    monopoly     in    Great 
Britain,  78. 
Bastiat's  law  of  diminishing  returns, 

306. 
Bessemer  steel,  251. 
Bonds  of  United  States,  53,  83,  103. 
Building  and  loan  associations,  181, 
186,  188. 

C. 

(Jaimes,  Professor,  191. 
Capital,    foreign,    invested    in    the 
United  States,  129,  192. 

of  Great  Britain,  how  invested, 
81,229. 

of  United  States,  81. 

profits  on,  57,  65,  262. 

waste  of,  57. 
Carey,  Henry  C,  24. 
Carnegie,  Andrew,  16,  21,  28. 
China,  wages  in,  89. 
Church,  work  of,  349-360. 


Coinage,  amount  of,  99, 
Competition    may    increase    prices, 
286. 

universal  character  of,  30. 

with  ignorant  laborers,  148,  153, 
300,  325. 
Conditions,  changed,  25. 
Connecticut,  statistics  of,  64. 
Corn  crop,  117. 
Credits,  143,  153,  166. 

in  United  States,  167. 

limitations  of,  164. 

substitute  for  money,  100. 

taxation  of,  221. 

use  of,  158. 
Currency,  contraction  of,  103,  106. 

statistics  of,  103. 

D. 

Depressions  of   industry   contempo- 
raneous    in    diflferent     countries, 
260. 
Distribution    of   products,    cost    of, 
63,  64. 
of  wealth,  75,  127. 
Dodge,  J.  R.,  on  agricultural  prod- 
ucts, 37. 
Duties  on  imports,  194. 

by  whom  paid,  197. 


Education,  342. 

industrial,  241,  331. 
Ethics,  368. 
Exports,  domestic,  110. 

of  wheat  and  flour,  111, 


361 


362 


INDEX. 


F. 

Farmers,  loans  to,  317. 

Fisheries,  48. 

Food  in  Europe  and  United  States, 

88. 
Forestry,  48. 
Free  trade,  233,  261. 

true  policy  for  England,  240. 


George,  Henry,  on  increase  in  pro- 
duction, 11. 

on  taxation,  274. 

on  usury,  170. 

on  wages,  305. 

writings  of,  23. 
Gold  and  silver  product,  51. 
Great   Britain,   foreign    investments 
of,  81. 

free  trade  in,  246. 

imports  of,  229. 

incomes  in,  78. 

investments  of,  in  United  States, 
129,  192. 
Greeley,  Horace,  24. 

H. 

Homes  of  working-men,  84,  187. 
Houses  in  England  and  Ireland,  78. 
Hoyt,  Henry  M.,  24,  260. 

I. 

Illinois,  product  of,  42. 
Immigration,  244,  271. 
Income  tax,  78,  216. 
Industrial  bureau  requir(xl,  266. 
Industries,  table  of,  62. 
Inheritance,  law  of,  20. 
Insurance  by  the  State,  190. 
Interest,  accumulations  of,  152, 182. 

effect  of,  183. 

equity  of,  168. 

illustration  of,  178 

in  Holland.  324. 


Interest,  low  rate  of,  as  a  remedy  for 
low  wages,  318,  338. 
policy  of,  172. 
relation  of,  to  price  of  land,  184. 

of,  to  savings,  317. 
to  dependent  classes,  189. 


Kellogg,  Edward,  24. 

L. 

Labor  and  capital,  conflicting  interest 
of,  313. 
capacity  of,  9,  28,  133,  141. 
combinations  of,  326. 
cost  of  superintendence  of,  65. 
dependence  of,  27,  124,  292,  300. 
distribution  of,  30,  83. 
earnings  of,  compared  to  prod- 
uct, 64. 
mobility  of,  204. 
waste  of,  207. 
Land,  distribution  of,  in  France,  81. 
in  Great  Britain,  78. 
in  United  States,  83. 
limitation  on  ownership  of,  274, 

339. 
monopoly  in,  76,  81,  339. 
public,  exhausted,  280. 
taxation  of,  218. 
Liquors  and  tobacco,  use  of,  161. 

M. 

Malthus,  T.  K.,  5,  808. 
Manufactures,  product  of,  49,  56. 

profits  of,  57,  237. 

statistics  of,  48,  63,  70. 
Massachusetts,   statistics   of,   37,  40, 

44,  63,  92. 
Maurice,  M.,  358. 
Meat  product,  38,  48,  92,  111. 
Mill,  J.  S.,  on  effect  of  inventions,  12. 

on  free  trade,  233. 

on  law  of  rent,  311. 


rM>KX. 


3G3 


Mill,  J.  S.,  on  recuperating  power 
of  labor,  132. 

on  usury,  169. 

on  wage-fund  theory,  293. 

writings  of,  24. 
Mining,  48. 
Ministers,  362. 
Money,  statistics  of,  97. 

uses  of,  97,  160,  178. 
Monopolies,  artilicial,  282. 

in  land,  279,  339. 

in  wealth,  288. 

natural,  274,  335. 
Mortgages  in  Europe,  259. 

in  United  States,  82,  167. 

N. 

Nimmo,  statements  of,  37,  48. 


Oats,  118. 


O. 


P. 


Panics,  cause  of,  166. 
Patent  rights,  283,  337. 
Paternalism,  270. 
Patten,  Simon  N.,  321. 
Pensions,  210. 
Personal-service  classes,  67. 
Pig-iron,  252. 
Political  economy,  5. 
Potatoes,  118. 
Prices,  comparison  of,  112. 

effect  of  fall  in,  156. 

fifty  years  ago,  94. 

in  thirteenth  century,  54. 
Product,  total,  of  United  States,  51, 

54. 
Production,  19,  36. 

regulated   by   consumption,  29, 
143,  291. 
Professional-service  classes,  67. 
Profits,  how  limited,  315,  318. 
Property,  what  is,  115. 
Protection,  200,  225. 


Protection,  history  of,  24G. 

principle  involved  in,  234. 
Public  debt,  payment  of,  211. 

lands,  pasturage  of,  208. 

R. 

Railways,  earnings  of,  50. 

limit  on  charges  by,  277,  336 

value  of,  278. 
Religion,  349. 
Rent,  law  of,  311. 
Ricardo,  5,  294,  311. 
Rogers,  Thorold,  12. 

S. 

Savings,  124,  133,  143. 

effect  of,  148,  149. 

in  credits,  153. 

in   money  means  deferred   con- 
sumption, 145. 

limit  of,  126. 

represented  by  durable  property, 
125,  147. 

use  of  spirits  and  tobacco,  effect 
of,  on,  161. 
Shearman,  T.  G.,  76. 
Sheep  husbandry,  200. 
Silver,  legislation  concerning,  100. 

statistics  of,  97,  100. 
Standard  Oil  Company,  283. 
State  may  loan  money,  189. 
Steel  rails,  254. 
Strikes,  326,  829. 

T. 
Talmud,  7. 
Tariff  commission  required,  266. 

revenues,  195. 
Taussig,  F.  W.,  24. 
Taxation,  192. 

burden  of,  206,  208,  214. 

direct,  217. 

exemptions  from,  250. 

indirect,  194,  213. 


364 


INDEX. 


Taxation,  internal  revenue,  214. 

on  credits,  221. 

on  incomes,  210. 

on  land,  218. 

on  spirits  and  tobacco,  214. 
Taxes,  amount  of,  59,  75. 
Theology,  350,  352,  354,  858. 
Thompson,  K.  W.,  24. 
Tobacco,  161. 
Trade,  international,  225. 
Transportation,  cost  of,  54. 
Trusts,  289. 

U. 

Usury  laws,  174. 
George  on,  170. 
Mill  on,  109. 
Wayland  on,  168. 

V. 

Value,  elements  of,  113. 

fluctuations  of,  30,  107. 

how  determined,  116. 
Vote,  commercial,  342. 

W. 

Wage-fund  theory,  293,  310. 
Wages,  high  standard  of,  desirable, 

154. 
how  determined,  147,  293,  301, 

813,  325. 


Wages  in  agriculture,  14,  60,  80,  95. 

in  China,  89. 

in  1850,  94. 

in  Europe,  86. 

in  new  countries,  high,.  130. 

in  thirteenth  century,  91. 

in  United  States,  55,  60,  62,  72, 
85,  89,  90,  254,  264,  300. 

limited  by  statute,  333. 

of    skilled   and  .  common    work- 
men, 149. 

one  hundred  years  ago,  90,  93. 

relation  of,  to  consumption,  129. 
to  interest,  130. 

tables  of,  53,  55,  60. 
Walker  on,  294. 
Wayland,  Francis,  24,  165,  168. 
Wealth,  aggregation  of,  18,  63,  76, 
78,212,284. 

distribution  of,  75,  127. 

limitations  of,  134,  136. 

necessity  of,  142. 

of  United  States,  73. 

production  controlled  by,  134. 

remedy  for  aggregation  of,  141. 

stationary  state  of,  121,  129. 
Wheat,  prices  of,  94,  117. 

production  of,  108,  109,  112. 
Working-man,  education  of,  342. 

homes  of,  84. 

status  of,  how  determined,  348. 


THE   END. 


^4^  OF  THE        ^ 

UiriVERSITTJ 


Printfd  by  J.  B.  LiPPiNCOTT  Co«r,PANY,  Philaoelpma. 


OVERDUE.  ^ ^== 


BCR  27  19; 


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7/33 


YC  78104 


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